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.

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. Game Theory
and Mechanism
Design

3. Blockchain and
Distributed
Ledger
Technology

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. The Contract

7. Kleros, the first
system of
decentralized
justice

8. Arbitrator

9. Arbitrators

10. Alice Wins
Arbitrator

14. Cryptoeconomic
Incentives

16. 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

17. Arbitrators are
rewarded to vote
like the majority

18. Users trying to game
the system will
lose money
on average
$

19. Honest arbitrators
will
make money
on average
$

22. Feature 1:
Rule of Law

23. The dispute resolution procedure
is encoded as a decentralized
autonomous organization which
has the capacity to produce rule
of law.

24. 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.

25. Doges on Trial

26. Users send images
and jurors decide
whether they should
be accepted in the
list...

27. Users earn a small
reward for each
accepted Doge
image...

28. Users could earn
$12,000 if they got
jurors to accept a
cat in the list

32. Doge: 0
Not Doge: 3
REJECTED

34. Doge: 3
Not Doge: 0
ACCEPTED

35. Appeal

36. Doge: 7
Not Doge: 0
ACCEPTED

38. Doge: 3
Not Doge: 0
ACCEPTED

39. Appeal

40. Doge: 1
Not Doge: 6
REJECTED

41. Is the dispute resolution
procedure encoded as a
decentralized autonomous
organization in a blockchain?

42. Feature 2:
Cryptoeconomics

43. The system produces economic
incentives to reach the desired
outcome.

44. Fighting Fraud in Crypto
Exchanges

45. Problem
Tokens looking
to be listed
Accepted
Tokens
How to decide which tokens to list in a clear and
transparent way?

46. Jury
ChallengerSubmitter

47. The Baerchain Case

48. Scott Bingley,
the Fake CTO
A non existing
group at Oxford

49. Suspicious
Changes in White
Paper
Fake Social
Media Profiles

50. Is the resolution mechanism
based on economic incentives?

51. Feature 3:
Fairness

52. Is the system perceived as
fair by members of the
community?

53. Daniel Dimov’s Framework of
Procedural Fairness

54. PROCEDURAL FAIRNESS
Expertise Independence Impartiality Transparency
Fair
HearingDecision
Control
Process
Control
Providing
Reasons
Length of
Procedure
Consistency Accuracy
Correctability
Ethicality

55. Challenges of
Decentralized Justice:
- Technical
- Market
- Legal
- Ethical

56. Challenge 1:
Technical

57. Will blockchain technology scale
to enable massive use?

58. Will decentralized justice systems
be able to withstand collusion,
bribery, 51% attacks, etc.?

59. Challenge 2:
Market

60. What are the industries where
decentralized justice models will
be more prevalent?

61. Which business models will
arise?

62. Challenge 3:
Legal

63. How will decentralized justice
interact with existing regulation?

64. Will decentralized justice systems
be accepted as legally valid
arbitration under UNCITRAL
rules?

65. Challenge 4:
Ethical

66. Will decentralized justice be
perceived as fair?

67. Courts
Banks
Encyclopedias
Analog
Centralized
Digital Centralized Digital
Decentralized

68. 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