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When Blockchain Meets Law: the Birth of Decentralized Justice

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This is the slide deck of the presentation of Federico Ast and Bruno Deffains at the "Blockchain and Procedural Law: Law and Justice in the Age of Disintermediation
Automating Legal Instruments" held at the Max Planck Institute in Luxembourg on December 6th, 2019.

Published in: Law
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When Blockchain Meets Law: the Birth of Decentralized Justice

  1. 1. FEDERICO AST CEO, Kleros federico@kleros.io When Blockchain Meets Law: the Birth of Decentralized Justice BRUNO DEFFAINS Professor, Université Paris 2 bruno.deffains@u-paris2.fr
  2. 2. Game Theory and Mechanism Design
  3. 3. Blockchain and Distributed Ledger Technology
  4. 4. DECENTRALIZED JUSTICE DECENTRALIZED CRYPTOECONOMICS FAIRNESS The system operates as a decentralized autonomous organization with the characteristics of rule of law. Agents are subject to economic incentives to provide rulings. Decisions made by the system are perceived as fair.
  5. 5. The Contract
  6. 6. Kleros, the first system of decentralized justice
  7. 7. Arbitrator
  8. 8. Arbitrators
  9. 9. Alice Wins Arbitrator
  10. 10. Cryptoeconomic Incentives
  11. 11. 3785 4903 5232 9864 3927 1214 1000 2783 4287 3893 2398 8538 Pick a Number If you pick the same that the majority, you get $20
  12. 12. Arbitrators are rewarded to vote like the majority
  13. 13. Users trying to game the system will lose money on average $
  14. 14. Honest arbitrators will make money on average $
  15. 15. Feature 1: Rule of Law
  16. 16. The dispute resolution procedure is encoded as a decentralized autonomous organization which has the capacity to produce rule of law.
  17. 17. The six features of the rule of law (Weingast and Hadfield, 2013): - The decision making logic is publicly available. - The institution resolves ambiguity. - The decision-making logic is stable. - The system gives predictable results to novel inputs. - It's impersonal. - It can produce new rules by soliciting information from users.
  18. 18. Doges on Trial
  19. 19. Users send images and jurors decide whether they should be accepted in the list...
  20. 20. Users earn a small reward for each accepted Doge image...
  21. 21. Users could earn $12,000 if they got jurors to accept a cat in the list
  22. 22. Doge: 0 Not Doge: 3 REJECTED
  23. 23. Doge: 3 Not Doge: 0 ACCEPTED
  24. 24. Appeal
  25. 25. Doge: 7 Not Doge: 0 ACCEPTED
  26. 26. Doge: 3 Not Doge: 0 ACCEPTED
  27. 27. Appeal
  28. 28. Doge: 1 Not Doge: 6 REJECTED
  29. 29. Is the dispute resolution procedure encoded as a decentralized autonomous organization in a blockchain?
  30. 30. Feature 2: Cryptoeconomics
  31. 31. The system produces economic incentives to reach the desired outcome.
  32. 32. Fighting Fraud in Crypto Exchanges
  33. 33. Problem Tokens looking to be listed Accepted Tokens How to decide which tokens to list in a clear and transparent way?
  34. 34. Jury ChallengerSubmitter
  35. 35. The Baerchain Case
  36. 36. Scott Bingley, the Fake CTO A non existing group at Oxford
  37. 37. Suspicious Changes in White Paper Fake Social Media Profiles
  38. 38. Is the resolution mechanism based on economic incentives?
  39. 39. Feature 3: Fairness
  40. 40. Is the system perceived as fair by members of the community?
  41. 41. Daniel Dimov’s Framework of Procedural Fairness
  42. 42. PROCEDURAL FAIRNESS Expertise Independence Impartiality Transparency Fair HearingDecision Control Process Control Providing Reasons Length of Procedure Consistency Accuracy Correctability Ethicality
  43. 43. Challenges of Decentralized Justice: - Technical - Market - Legal - Ethical
  44. 44. Challenge 1: Technical
  45. 45. Will blockchain technology scale to enable massive use?
  46. 46. Will decentralized justice systems be able to withstand collusion, bribery, 51% attacks, etc.?
  47. 47. Challenge 2: Market
  48. 48. What are the industries where decentralized justice models will be more prevalent?
  49. 49. Which business models will arise?
  50. 50. Challenge 3: Legal
  51. 51. How will decentralized justice interact with existing regulation?
  52. 52. Will decentralized justice systems be accepted as legally valid arbitration under UNCITRAL rules?
  53. 53. Challenge 4: Ethical
  54. 54. Will decentralized justice be perceived as fair?
  55. 55. Courts Banks Encyclopedias Analog Centralized Digital Centralized Digital Decentralized
  56. 56. FEDERICO AST CEO, Kleros federico@kleros.io When Blockchain Meets Law: the Birth of Decentralized Justice BRUNO DEFFAINS Professor, Université Paris 2 bruno.deffains@u-paris2.fr

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