Kleros — The Missing Link to Decentralised Freelancing

Freelancing has changed the modern workforce irrevocably. Few other innovations in the business sphere have had such an impact in such a short time frame. According to a recent Forbes article, freelancers now make up a staggering 35% of the US workforce. That’s almost 55 million in the US alone.

In little over a decade, the number has risen from 10 million (or 7.3%) to one in three of the US workforce. UpWork , which is one of the ‘Big Three’ freelancing platforms, deals with more than $1 Billion worth of job postings annually with Freelancer.com and PeoplePerHour in similarly valued territory.

Having worked for many years as a freelancer, I’ve seen the continued erosion of earnings toward running costs, development, support and profit of the respective sites. The companies in question would argue without their existence, sellers would receive less income (or no income at all) and thus justify their right to the large cut (up to 30%) taken from the final invoice.

Much like the rest of the tech economy, the big players have firmly entrenched themselves and without monumental change, are unlikely to be usurped in the near future. The competitors in the decentralised sphere are still far behind making inroads to the main platforms user base.

Let’s take Ethlance, a perfectly acceptable decentralised freelance marketplace. It’s well designed, looks pretty, functions well, offers 0% fees and has no restrictions on membership. However, it currently suffers from a few major flaws.

The first one is lack of volume. A quick scan on the ‘Find Work’ page shows a grand total of four job postings made in the last week. UpWork on the other hand, probably counts closer to four job postings a second.

The second one is the lack of a reliable dispute resolution system. From the comment made by EthLance dev Mavdas, its clear the lack of dispute resolution and functional escrow is hampering the greater adoption of decentralised freelancing services.

Should Ethlance or any other decentralised platform solve this issue, the end user benefits are vast.

How Kleros Can Help

Kleros can provide the low cost dispute resolution necessary to allow decentralised freelance platforms to flourish. In doing so, they can offer the same level of security, conflict resolution and efficiency their centralised peers do.

Decentralising arbitration brings with it another huge benefit, namely, levelling the buyer / seller bias when disputes arise.

In the case of a dispute, centralised freelance platforms will, on most occasions, side with the buyer. It’s no real surprise, since buyers are ultimately funding the platform. With decentralised platforms using Kleros as the arbitrator, this is no longer true. Both buyer and seller start on an equal footing should a dispute arise.

Kleros can be tailored through our subcourts to cater to any market no matter how large, or niche it may be. From the more commonly expected disputes such as the example below, to very rare cases with few experts in the field.

Decentralising arbitration opens the door to every single person on earth contributing their knowledge about any subject. You could reside in California, whilst a leading expert on your topic picks through the evidence of your dispute from the Outer Mongolian Steppe.
This infographic summarizes how the dispute resolution process works.

Alice contracted Bob to build a website and it didn’t quite go to plan. Kleros is an ‘opt-in’ system so both parties have already agreed to be arbitrated by our smart contract should a dispute arise. Enforcement of the decision is guaranteed by the smart contract itself upon the jurors ruling with no outside or ‘real-world’ interaction necessary.

In short: If you’ve accepted the smart contract as arbitrator, you accept the enforcement stipulations.

If no dispute is brought, Alice would simply click ‘ Pay’. Funds would be released to Bob and that’s the end of the story.

In this case however, the dispute has been opened and now both Alice and Bob will deposit their arbitration fees (in ETH) towards the dispute. If one party was to negate on depositing this fee, they would lose the case on the basis of non-participation.

The next stage sees Kleros pick jurors at random from a pool who claim to have expertise in the field of e-commerce. These jurors have deposited PNK tokens (our financial incentive and method of securing the whole system) into the e-commerce subcourt. Basically, these jurors want to be picked to arbitrate cases in this subcourt and those who do not deposit tokens are not included in the draw.

These jurors know about the subject, have worked in the industry and bring with them vast quantities of experience in that particular field. The more PNK they deposit, the more likely they will be chosen to arbitrate. Once chosen, jurors are tasked with examining the evidence before voting in an A/B manner for the party they believe correct. At this point, the losing party has the ability to appeal should they feel so inclined.

(For more on appeals and why it’s not feasible to appeal ad nauseam read our dedicated cryptoeconomics researcher explain here).

Once the arbitration is over, the smart contract releases the initial fee both parties paid to start the resolution. Alice is reimbursed and Bob is penalized by paying the arbitration fees. The jurors who voted honestly and coherently gain possession of those jurors tokens who did not.

“ Jurors won’t care about the evidence, they’ll just guess. “

- your mildly cynical inner monologue — circa 2018

That is of course, a valid possibility. Fortunately, smarter minds have considered this and come up with a solution.

Jurors are incentivized to vote honestly using the Schelling focal point. Indeed, a well versed juror in their particular field could earn a handsome side income for none other than assessing the relevant evidence and voting coherently as the evidence would suggest.

Jurors who click at will, run the risk of voting incoherently and therefore, lose their initial deposit made to arbitrate on the case. It makes no sense to take the ‘roulette route’ of gambling on either A or B, as ultimately, you’ll end up gaming yourself by voting incoherently and losing tokens.

To Conclude

The large Freelancing platforms have provided an income to many, a second job or the ability to operate in foreign markets thousands of miles from their own. Some 20 years ago it would be unthinkable to contract a reputable and skilled Korean translator from the comfort of your own home at an incredibly cheap price point within minutes of searching.

Finding a reputable web developer at urgent notice to fix a malware your website contracted was a tough ask, not to mention expensive.

Now, we’re blessed by the ability to do both, cheaply, easily and all whilst still in our pyjamas. The price to pay however, has been complete centralisation over policy making, high fees ,buyer bias all in the name of expansion, greater profit and increasing overheads from centralised actors.

Kleros’ utility towards freelancing is only the tip of the iceberg, there are a myriad of possible use cases which could benefit from our dispute resolution, each bringing with them significant benefits for the end user.

Kleros: A modern arbitration technology for a new, decentralized and global economy.

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