Kleros is a general purpose dispute resolution dapp. It currently has an escrow, a curated registry of tokens, a proof of impact fundraising platform and an oracle using it.
Kleros is used by the DutchX using the ERC20 badge of the Token² Curated Registry (as a result of a previous proposal) to display tokens in its interface. And the Kleros team has combined the buy and sell frontend of the DutchX and fixed a few UI bugs.
Kleros has been integrated as a final arbitrator through realit.io within the conditional token framework and can be selected as an arbitrator on this frontend (you can even try the US presidential election market and the corona deaths markets which are live and have liquidity).
Kleros is also the arbitrator of the 10 000 GNO (~200 000$) grant from Gnosis to the dxDAO on the condition that there will be at least $20,000,000 in Gnosis Protocol trading volume originating from orders created on interfaces controlled by dxDAO.
Omen is a prediction market project ran by the dxDAO based on the conditional framework made by Gnosis. Its primary arbitrator is realitio and supports selecting a final arbitrator.
When a prediction market reaches its resolution date, anyone can report an outcome by staking ETH on realitio. If someone doesn’t agree with the outcome, they can dispute it by staking on another outcome such that there is at least twice as much on this new outcome. This process repeats until:
- No one dispute the current outcome for a determined period of time. In this case the current outcome is considered the final one.
- Someone escalates the dispute to the final arbitrator of the market by paying the arbitration fees. In this case the outcome returned by the final arbitrator is considered to be the final one.
People who staked their ETH on the final outcome / escalated an incorrect outcome to the final arbitrator gets the ETH of people who reported incorrect outcomes.
Since the arbitration fees are paid by the party escalating, escalation is only worth it once the amount of value at stake greatly exceeds the arbitration fees. For this reason almost no disputes escalate to this point (Up to now, there hasn’t been any dispute escalated to the final arbitrator on realitio. On the competing prediction market Augur which uses a similar system, we haven’t seen usage of the final arbitrator either).
The idea being that the system requires a really secure arbitrator to work and that the cost of this arbitrator can be high, but it should almost never be used, as the simple threat of someone escalating to it makes people stake on correct outcomes (directly or potentially after a few staking events when it becomes clear which outcome looks like being the consensual one).
We see 3 potential modalities of collaboration on Omen (with Kleros being a secondary arbitrator, Omen being arbitrator neutral or Kleros being the preselected arbitrator).
For Kleros, the benefit is to get more Dapps connected to Kleros as part of the ecosystem bootstraping and potentially get a few cases.
For Omen is to allow its users to select (potentially among other arbitrators) the first dispute resolution Dapp.
In addition, depending of the closeness of the collaboration, the Kleros team can also bring smart contract security skills in reviewing contracts used by Omen. We already did a security review of realitio when we integrated (We found a small issue which fortunately is only affecting commit and reveal which is not implemented in graphic interfaces. So the issue is not present for people interacting with realitio via Omen or realitio interfaces and will be corrected in next version.), we could expend this security review to the conditional token and liquidity contracts in order to have all the Omen code covered. The security review could include a bug bounty program.
We would also set up a reward program for people creating markets. The rewards will be proportional to the open interest (total amount at stake) of their markets. Open interest is a more interesting metric than volume which can easily be faked by wash-trading. As part of the reward program, the dxDAO will award a reward to the creator of the most impactful market which will be used as part of the communication strategy.
Rewarding the first market creators (which will likely be liquidity providers of their markets) is important, as without market creators / liquidity providers, potential users coming to Omen will not be able to trade and quickly lose interest if there isn’t enough liquidity. We can see Omen as a 2 sided marketplace with liquidity providers and traders. The reward program ensures that providing liquidity initially is a financially rewarding activity even before having a high flow of traders.
In addition, on the higher levels of collaboration proposed, the Kleros team would reward financially the dxDAO for launching and reaching some open interest milestones. This would be done via conditional tokens (same as the conditional GNO to the dxDAO).
Finally, the Kleros team will communicate on Omen which should bring some Kleros community members to trade on Omen and potential partners to use Omen as decision helping tool (providing liquidity to markets in order to get insight on the question while not necessarily trying to make profit).
You can find the following doc different modalities of collaboration, don’t hesitate to make comments and indicate the ones you’d prefer. The most consensual of those will result in a formal proposal to the dxDAO.