The Role of Dispute Resolution in Blockchain Ecosystems

Transcript

[Music] thank you so much um so to start and just make it a bit more interactive and warm up I wanted you to scan this QR code and um maybe answer like what do you think governance in the web free today is like what is the first thing that comes to your mind um I think we just have like so many great talks today about governance and um um it's very interesting based on you know the background of the person whether he comes or she comes from technical or legal background or maybe none of them and

um it's it's it's nice just to to see what are the like what are the insights and what are the state of governance today in the web free according to Let's if you're submitting answers and it's not showing up that's that's not really good is it no wait wait that's that's okay okay good good so we have hate we have love we have vote and peace um buzzword Rabbit Hole um politics still early

um experimenting decentralized favorite word um delegate technical uh still early again politics there's a lot of politics interesting Messi I love that I think um I would agree with most to them um there's definitely a lot of politics we have some more answers um Peace um I don't I'm not sure I think ideally but more often than not it is messy chaotic um rarely

decentralized um right um and and often complex so um okay so I'm working at Claris um as a researcher and my presentation does not cooperate with me today um great um I'm also a researcher at

blockchain golf and I do my PhD in Paris to University so I vented space in 2016 when I was a law student I was interested in the recent developments there was a lot of initiatives back then about like crypto assets how do we Define them how do we um just create legal Frameworks around them and then I did my bachelor's on it then I did my masters and now I'm doing PhD basically never left here we go um now I'm focusing for the past three years on dispute resolution um I'm curious about everything that comes around legal and governance related and uh recently together with my colleagues from blockchain golf we were analyzing basically 11 blockchain networks and there are pretty

interesting insights so we published this report in collaboration with project Liberty I encourage you to take a look that's not academic report that it's a governance toolkit cookbook so if you were involved are involved in governance looking forward to be involved in governance I think that would be pretty interesting read just because it's very accessible we um purposely made it so so that it's not as like heavy academic report that you would usually see it's pretty pretty concentrated refined Insight that we've observed in the ecosystem so um at this point I think we can all agree that there's no single recipe how governance for any decentralized blockchainbased project should look like it all depends where your values are what do you want

to what are your overarching goals goals right so uh depending on a system whether you want to make it more efficient we talked about it some of the speakers um presented earlier today talked about uh inclusivity um or perhaps the trade-off of that would be cost efficiency then we have uh immutability do we want our governance Frameworks and rules be immutable uh for predictable operations or do we want something that is adaptable that we can mold and uh addit and change based on the context and then of course discretion and determinism and we have also you know just different takes when it comes to governance rules and how

they should be performed and then based on that based on where your interest values how do you define your community and how do you want your governance to progress there are safeguards to upkeep basically any of the above and more that is just some of the examples and again again if you want to learn more I suggest you to take a look at the report we have um what we Define like you know a recipe where you can pick ingredents and then refine your flavors and you know continue to basically um refine your recipe so hopefully you will achieve your desired governance framework but there are safeguards in place to upkey whatever chosen form of

governance um and very often uh they vary and they include several of them sometimes because one does not uh exclude the other and very often in governance systems we see implementation of different mostly both onchain and offchain uh governance governance safeguards but today I want to focus on dispute resolution specifically and when we talk about blockchain based dispute resolution um at least in uh like legal researcher field we often talk about online dispute resolution alternative dispute resolution how can we through the use of blockchain Technology enhance the courts enhance the dispute

resolution scene and while I think it is important to talk about that I I believe that blockchain based dispute resolution at least what I do in my research um is to prove that it's there because there is blockchain based relationship and because it includes humans we are prone to disputes there are relationship that has to be governed therefore there is a disp resolution to support that relationship to make sure so uh in this presentation in my own research I try to take a step back and not view it as an enhancement of you know already available alternative disp resolution forms but more so to see okay we have onchain relationship we have to have disp resolution to support it very

similarly to what happened in early 2000s with um you know one one of the earliest marketplaces and we had one of the earliest examples of online dispute resolution which was eBay dispute resolution again I don't think when they were creating it I mean I know when they were creating it they weren't creating it from the point of okay we need to revolutionize courts now no they had a problem they had a lot of buyers and sellers entering very small disputes and interestingly from Colin rule the creator of eBay dispute resolution he himself uh stated that when he was designing this system he observed that the sellers and the buyers needed something that is reliable efficient and

fast so people didn't necessarily care about fairness per se they just wanted a reliable instrument that they know that they will solve disputes for them so um I think that again we're talking about very small in majority of it um dispute claims and um that is very important when we talk about blockchainbased dispute resolution as well I think often we make mistake of uh taking criticism that maybe online dispute resolution Court face and transport it to blockchain basis prodution I don't think it's makes sense all the time but I will I will show you why so um that's just an example how internet involved now we have web free and web free is evolving

as well therefore you know we need some sort of dispute resolution to support it so very very briefly broad regularization is from fully on chain to F of chain um I'm going to give a couple of examples a bit later um so I mean I think pretty much it's self-explanatory right but um blockchainbased dispute resolution involves implementation of blockchain Technology at some stage of the process fully onchain means that at every stage of the process there's blockchain technology that is being involved from the initiation of the dispute to the uh dispute um you know juror selection decision making and then the enforcement Hybrid models usually

involve thisp resolution at some stage but often for example enforcement just unrealistic like to achieve through smart smart contract for whatever reasons uh for example I don't know we we decide to utilize blockchain based disp resolution but we didn't allocate the funds on chain before therefore there's nothing for smart contract to enforce things like that and then offchain so um strictly speaking this is not blockchain basis resolution this is something that involves mediation negotiation that is something that blockchain communities widely use because again we're humans we're prone to disputes and if you've been involved in any governance drama you would know that there is a lot to unpack so

negotiation mediation is very useful however it's not strictly blockchain based because it it's completely offchain to be fair uh often is done through means like Zoom however it relates to blockchain relationship that's why I thought it's good to include it here and there a couple of projects that doing pretty good job with that so um couple of examples um Claris of course uh not just because I worked there but also because from 2017 there was a booming uh fashion for dispute resolution uh in blockchain uh and there are couple of project that are being cited alongside Claris still nowadays um I'm not going to name them but if you do see them there are two of them um

they no longer exist I don't know why they're still being named and in academic literature as well this is what I'm trying to also uh do in my research I try to highlight the actual state of disolution in blockchain ecosystems um so we don't go inside the same thing all over again and we just actually look and see whether those courts function at all so arbitration means that uh in clar system at least that um we have everything the ability to have everything on chain there's also ability for hybrid Solutions and very quickly we like to mention that one use case that we had uh were which happened in CL uh in in Mexico two parties uh tenant and landlord uh had you know an argument but

before that they had contractual relationship and they decided if we have a dispute we will utilize uh like clar Services they had an arbitrator they appointed him he submitted manually all the case details to clar and and um basically jurors were drawn and uh the decision how do you enforce something like that like tenant landlord decision you can't enforce it so um they took that decision to court and the court enforced it through the public Force so um that spiked um discussion over the first recognition of blockchainbased uh arbitration I mean the only thing Court did is that it didn't mind two parties using Claris as a form of ADR right and

we don't know what would have happened if one of the parties didn't agree with that or something else something else but this is a good example of hybrid it happened uh and um yeah why not although that is not the main use case for uh blockchainbased dispute resolution but I just wanted to highlight that this can also take place so um mediation and negotiation so uh gravity da for example they're doing a quite a good job they are uh providing consultations Community um consultations and training and um but it's completely offchain uh and um what they're doing I think it's great uh blockchain related not on chain at all but I think it's worth mentioning

um because that is also a very important part of efficient and uh you know successful governance we have communities and very often things like culture uh some minor interpersonal disputes are being overlooked and they consist very you know it's like a ticking bomb um and then we have some of the new projects pop up so I was like I'm going to be impartial I'm not going to I'm I'm going to include other projects right and um the truth is that there are many of them there are many of them however there are not that many of them that actually work and that have any case loads so one that I'm curious about is peacekeepers project because they kind of uh promise to do something

similar to what Claris does but we've created list of mediators um and yeah we'll see how it goes because for now they are I think in a better version and they haven't had uh any cases um as of right now but it's an interesting take because um when we talk about Claris system we have anonymized pool of jurors and Peacekeeper project from what I'm understanding they want to take a different take on it and have per profal mediators mediate the disputes that would be potentially enforceable through smart contracts I'm not sure how but we'll see um and then clar's case study so it's been around 2017 2018 um as of right now we have more than 1,600

cases so um very quickly we have arbital side we have arbitrator side uh clar is cour this is basically where all the disputes end up going and uh in order to you know engage with clearance ecosystem you can either be a platform or partner or a person who wants to utilize it for dispute resolution services or you can be a person who wants to deliberate or participate as a juror and then you would be able to just take certain amount of like uh pnk which is a native token and clar ecosystem and you'll be able to participate and uh by participating you would choose a court which you want to participate stake

there and once you being called which is uh anonymized random selection of jurors um you would be able to deliberate very quickly you'll have to examine the evidence and basically vote um most cases it's binary Choice yes no refuse to arbitrate and based on that you'll be either uh in the majority and based on shelling point if anybody's familiar with that probably most of you um you would end up winning and you would be paid uh or you would end up losing and that and your stti would be also uh taken away so that guarantees that we don't have so-called like lazy jur voter problem that people actually

spend time into examining the evidence they go through it and they you know put time into what do you think other jurors might vote as well so and then we have arbital side and uh most of the partners and or the project that we develop within clarc system we have the disputes going automatically there some of the most uh famous examples would be proof Humanity which is one of the most famous courts which is uh basically identity system on blockchain is uh registry civil resistant registry on blockchain of humans um I'm not sure if familiar with that uh but if you are we had a very interesting governance uh case uh past couple of years um yeah I'm going

to leave it there so um let's go a little bit further I don't have time to go in detail but basically that is the graph how it works so um one of the example that our CEO loves to give is that if for example we have um like I don't know service provider client relationship we decide to utilize Claris we use escro service and we allocate certain amount of money um let's say you're not happy the way I performed my services and uh you think that I shouldn't be paid then we escalate the dispute and then based on the parameters we chose um a certain amount of jurors would be drawn to court and they will deliberate uh and based on that

deliberation the funds would be either released or not and there is either also several rounds of possible appeals um that is would be fully onchain so the hybrid version of it would be if we didn't allocate the funds and then we either would we would still have the decision right but we would either have to take it as a non-binding sort of ad are and be like okay that would makes sense should we agree to that but then also if you don't have cooperating party how do you ensure that so um I think this is like very promising to talk about blockchain Bas dis resolution as an enhancement of you know options in this presion that we already have like as an alternative to

go to court or as an alternative to go to OD our system like online Court which has its own you know disadvantages as well as advantages I guess um but what we actually uh talk about when we approach blockchain based dispute resolution is uh something that is completely onchain and most of the use cases it's uh curation it's um challenges it's prediction markets it's Insurance um things like proof Humanity which is again uh simple resistant list of uh uh registered humans so that is basically the um kind of life of the the arbitration case um and then again uh if I'm not wrong we

now have the parameters allow up to seven rounds of appeals so if you think that the court wasn't fair the jurors were biased you Al always have um an option to appeal and interestingly I think we had a couple of pretty big cases if you're curious you could just Google Claire's famous cases we had some of them that were quite um big um in monetary compensation as well um so yeah but most of them they are concerning something that's completely onchain that is completely you know um like automated and something that doesn't draw that much of attention which I think again like it's it's it's great benefit because for things like prediction

Market or for things like um onchain governance or parameters how would you go and where would you where would you seek that um efficient way of mainstreaming that uh like decision making process so um surely there are a lot of criticism there are a lot of challenges and um we covered that in the paper together with my colleagues um I think the one that I'm focused on right now is legal challenges um I'm lawyer I have legal background and um at the end of my thesis right now I'm trying to uh tackle the problem of regular equivalence I'm not going to go too deep into that but

basically uh for projects like Laris or for other blockchain based disp resolution projects if they do seek that Regulatory Compliance because for now um for now you know all the speculations that it might be compliant with the New York convention or un Central laws or with something else it just um kind of it's It's unfounded because there's no enough evidence there's no jurisdiction that would have specifically blockchain based dispute resolution rules there is uh some movements in this regard Mexico that I mentioned before uh recently passed amendment to its arbitration laws that included the use of blockchain technology in uh arbitration um which is I think quite great and we also have for

example jurisdictions like UK and they had couple of years back uh when you know blockchain was uh the buzzword that AI is now they published something like digital digital dispute resolution rules um but again uh it's not a law um it's something that is maybe like recommend legal framework I guess at best so my take is that let's see what are the requirements for alternative dispute resolution like arbitration are in jurisdictions like UK and Mexico and let's see to which point blockchain based disp resolution systems can fit into that framework if not what are the changes that could be adapted for platforms that choose to fit into legal framework um so that they could do that

as a subcord or something that they could do in their version to and Etc so um of course there's scalability and technological challenges I've mentioned now my colleagues um uh working on the Claris version to and um as I said most of the it's not just Claris there's for example Uma with data verification mechanism also um Oracle um optimistic Oracle U they also work in a binary mode um and that is the like surely there could be more but that that is just the state of it is right now it's it's binary um in the future there could be more and my colleagues are working on that but um that that relates all to scalability then we also have

just platform availability and use awareness again that brings me to the point where people still uh reference project that are no longer existent some of them moved on some of them gave speeches today and that's great for them but I I think it's also you know we have to have updated information for both um users for both projects that want to utilize but don't know where to go and also just uh improved user interface I think even if you're in web 3 ecosystem um I think there's still a lot to do in terms of making sure that those solution those tools that we provide Dows for the better governance they are actually

accessible and yeah all our are challenges that we have right now interestingly U well in Claris model jurors are Anonymous okay pseudonymous they're not fully Anonymous nothing on blockchain is I would say is completely Anonymous if you do leave some track of what you're doing or there's some identifiable information about not maybe you personally but about your action there's some digital footprint so uh in clar system you don't have to reveal your name you don't have to reveal your education or anything of the sort um which I think is an advantage because at the end of the day what you're doing is you're as a juror you're sticking only

in those courts where you have high confidence that you would be successful like I wouldn't go and stay in technical court because I'm not a quarter so why would I do that but I would go and St somewhere that for example related to translation services where I speak both languages and I feel rather confident about my odds so um a lot of criticism goes towards um having you know jurors that aren't um like they don't have some like educational requirements or like kyc um and again I think the choice of words also matter in Claris we use terms such as Court jurors case all of that I think automatically link us to

traditional courts where we have juror system and juror system in our traditional understanding is like civil Duty something that you don't have a choice uh in doing or not doing um this is something that is completely different in spirit and nature but we do have similar terminology so I think it's fair thattime we get confused and we say how how come that jurors are being compensated or there is economic incentive for them to participate I personally don't see a problem with that um because again we're not solving criminal cases it's not that deep we are facilitating governance and uh that is amazing that is what it's for so I think it's great to kind of expand what web freak can offer to us and and to see

where it can apply but also let's be realistic let's use the tools that we have for what we need it for and then when there's anything else outside of that amazing great if somebody actually goes and uses Claris as an alternative to going to court that would be amazing and especially if it works for them and we have a lot of research that goes around possible adaptation of Claris in countries where there's just no court system there's no legal Frameworks there's you know just nothing and that would be made aming but um yeah I think my main focus of research is to basically see um how it operates how blockchain communities uh facilitate dispute resolution and how

it can actually enhance governance um and yeah that's that's the paper that I've mentioned together with my colleagues if you want to um read through the criticism and the way we address it and some of the most common points of questions it will all be there and I think that's it thank you so much for one more question anyone anyone has a question okay so no more questions uh but I was really intrigued about

claros they are very very famous in Argentina actually one of the projects you mentioned um was was from there and I wanted to ask if you are there from the beginning or how did you end up there in CL yes okay um so I mentioned that um I've been in the blockchain space from 2016 uh back then I was um uh lost students I was organizing local blockchain communities in my University um I was participating in the drafting of the like law to regulate crypto Assets in Russia back in that time in 2016 um and um I think when I progressed and then I was doing law full-time um I

was Consulting crypto projects and then I just wanted to move to research in web 3 EOS system full-time and back then my uh my corporate job didn't allow me that and then I was just looking through different options I was curious about you know thisp resolution that what I did um and I came across clar's project and uh yes I was just following it I was uh there was an incentive program back then that you could um basically participate in storytelling and get some uh rewards for that and there was one uh creator that was doing it in Russian and then I saw that they had an opening job and then I applied and then I uh frankly stoked our CEO saying that I think I'll

be actually quite good at it and then he had no choice but to give up and actually hire me so that how it how it went and three years later we're here couldn't be happier amazing team uh if you have any questions we have Jean uh and Juan and they're great people to chat about Claris