A More Decentralized Arbitration System

“two men shaking hands” by rawpixel on Unsplash

From the beginning I have been against the idea of ECAF (EOS Core Arbitration Forum). Not because anyone working on it is bad in any way. I think they’re great and trust them to do a great job. But decentralization is a core value. Unfortunately, because ECAF is the default (and as far as I can tell, the only) arbitration forum for constitutional issues that creates centralization.

Maybe there have been developments with ECAF that are more decentralized that I’m unaware of (if so let me know!) but for now I’d like to put forth a concept for a more competitive and robust arbitration system.

The Arbitration Agency

I suggest building into EOS the concept of Arbitration Agency. When someone creates an account not only are they agreeing to the Constitution but they are also required to select an Agency.

Note: They can change Agencies at any time.

The Agency is different than an Arbitration Forum because it is funded by inflation proportional to the number of members (with strong identity) who have selected it.

If an account without strong identity wants to join an agency, they will likely have to pay a fee.

What will Agencies do?

Agencies can do pretty much whatever they want to attract members. The only requirements would be that they act as default arbitrator for members and that they have their own constitution that binds their members. That constitution can pretty much do anything. They can…

  • Act as default arbitrator for all of their members
  • Act as Agent of the Member in holding BPs accountable
  • Protect members against fraud
  • Provide legal and judicial services
  • Provide members with delegated resources so they have free tx
  • Whatever they decide to do on behalf of the members.

There would be some agencies that do a lot and some that do very little. Token holders can choose which type they want.

Agencies as Branch of Government

BPs run the network and in large part act as ‘executive branch’ of the EOS ecosystem. They execute arbitration orders and all the transactions.

Arbitration Agencies then act as both legislative and judicial branches. Unlike current legislative and judicial branches, they are completely voluntary and decentralized. Instead of being ruled by the majority, you just choose which type of legal system you want to be a part of. So if an agency changes a ‘law’ for their members, the members can leave.

Finally a legal system that is subject to market forces.

(Note there would still be arbitrators that are not Agencies or a part of agencies to resolve disputes arising from specific contracts or between agencies)

Agencies would also serve as a check and balance on BPs. Right now there is little recourse against a BP behaving badly besides voting them out. Just because a criminal gets a lot of votes doesn’t mean he should be in office, for example. Agencies would have the ability to file suit against BPs for breach of the EOS constitution/BP Agreement.

Agencies as Private Nations

I would expect Agencies to become like private nations. They provide legal framework, judicial services and other services for members. They provide a certain type of society and set of rules for the members to abide by while also managing relationships between other Agencies and the members of other agencies.

Agencies would build reputation. Users who have an agency with a poor reputation or no agencies at all may be denied access to dapps based on that reputation.

The EOS constitution is like international law while Agencies provide ‘local’ law.

Some Agencies might be governed by a DAO model with their own token. Some might be more of a benevolent dictator. It’s up to the member to decide. It would be exciting to see what innovations in governance come about.

Some Agencies would return their income to their members. Some might burn their income to stifle inflation. Some might provide additional services. Again, it’s up to the members to decide what they want for their inflation.

Agencies as Insurance Companies

Currently insurance companies work together to resolve disputes between their members efficiently and to stay out of court. Agencies will provide an avenue to do the same. When there is a dispute between members of two Agencies then the Agencies may have an agreement for what arbitrator to use or even specific rules that keep it from going to arbitration in the first place.

Agencies as Fraud Protection

Agencies could white-list and black-list certain accounts, contracts or dapps to help protect members. They could also provide some sort of purchase guarantee like many credit card companies do where they reimburse/reverse payment/file suit for a member who’s suffered from fraud.

Wallets could build in a warning if you’re ever trying to transact with an entity that your agency has blacklisted.

Agencies could collaborate in identifying bad actors and black listing them. There would be a very strong incentive to not get blacklisted because if you get blacklisted by multiple agencies then you’d basically be cut off from transacting from huge portions of the economy. But Agencies wouldn’t want to falsely blacklist someone as that reduces their own income.

Agencies provide free tx

Much like our friends at CPUEmergency, Agencies could set aside a certain number of EOS tokens to use to dynamically delegate resources members who get stuck.

I’m sure others could come up with even more services that agencies could provide.

Competition in Arbitration, Law and more.

This concept would allow for great competition in areas that currently have little competition. Someone can leave their Agency at any time. If it is managed poorly or doesn’t represent the member’s interests they can leave and that hurts the income of the Agency.

There would be agencies that do very little. There would be agencies that impose rules on their members. There would be agencies that are socialist. There would be agencies with UBI/URI for their members. A diversity of societies would emerge within EOS.

This would also greatly simplify the EOS Constitution. That constitution could be a bare minimum that focuses on protocol level issues (like v2) and leaves user and dapp relationships to be governed in a more decentralized way through agencies and contracts.

This provides much more flexibility. Instead of doing cumbersome referendums for all legal changes, just move to a different agency.

There’s much that can be said about this but I hope this can start the conversation.