SmartDispute: The Crux of a Self-Regulated, Decentralized P2P Community
With simple transactions, it’s better to have a self-regulated system. In order to avoid the added stress and complexity of a centralized resolution centre, we’ve implemented and developed SmartDispute.
SmartDispute is essentially a peer-regulated and controlled group of arbiters who act as a jury when claims are made on our platform. Not only does it give power to the people, it also ensures that disputes are handled in a fair and timely manner.
The Three Stages of SmartDispute
1. The first stage allows a user to raise the dispute, identifying the issue that arose and asking for an equivalent penalty or compensation from the offending party. Depending on the case, there can be either a fixed penalty or a penalty request ranging from 1–99% of the deposit.
Let’s say you rented out your audio recording equipment, only to have it returned to you a few days after the agreed return date. In this case, you might have set a prior agreement that equipment returned late would result in a 10% deposit fee. If so, a message would go to the renter informing them of the fee. They would then have the option to counteroffer.
2. If an agreement hasn’t been reached after 2 rounds of offers and counteroffers, each party has the option to escalate the case to the Dispute stage. Both parties would then have to produce all necessary documents and explanations in order to form a “Case File” within the deadline imposed by the Smart Contract.
Once the case file has been created, it would be sent to a randomly selected panel of 5 Arbiters, all of whom hold high levels of credibility. These arbiters will thoroughly evaluate the case file and issue their verdicts. The penalty and final verdict are calculated using the formula below:
After each judging round, every arbiter will receive one another’s verdicts and get the chance to evaluate the scores issued. Arbiter scoring will be on a scale of 0–5, with 0 representing a score that is totally inappropriate or off-base, and 5 representing a perfectly appropriate score. This helps create consistency and honesty among arbiters.
After an arbiter has participated in at least 3 arbitrations, the Smart Contract will then review their reputation based on scores given by the other arbiters. If the score of an arbiter averages out to be less than 3.5, then they will no longer be qualified to be an arbiter.
3. Once the dispute has been settled, Smart Contract will transfer the appropriate compensation from the deposit locked in the lessee’s wallet to the lessor and unlock the remaining deposit. However, if the compensation is greater than the locked deposit, the difference will be transferred. If users don’t transfer the remaining balance within a specified time period, they’ll be flagged as “debtors” and their account will be frozen until the debt has been paid.
The Panel of Arbiters
Arbiters will be incentivized and compensated by receiving a 2% commission of the amount claimed by the user of whom escalated the dispute. This 2% commission will be shared among the panel of 5 arbiters and BizShake won’t charge any fee for the commission paid.
If an arbiter doesn’t review and judge a case within the allotted time frame, they’ll automatically receive a score of “0” and, if reiterated, lose the privilege of being an arbiter. On the other hand, if an arbiter doesn’t thoroughly review case files, they’ll likely receive a low score from their fellow arbiters as each arbiter can see one another’s score and time spent on a case.
SmartDispute Helps Peers Regulate Peers in a P2P Community
Just like the saying “teamwork makes the dream work”, the same can be said for a decentralized peer-to-peer community. In a community based on renting and pawning, disputes will be inevitable which is why our goal is to have them solved in a timely and fair manner. With the SmartDispute system and a panel of peer-reviewed arbiters, we’re hoping to streamline the dispute process while empowering members of the BizShake community.