How Can Dispute Resolution Mechanisms Be Embedded within Smart Contracts to Function without Traditional Courts?

Embedded dispute resolution can be achieved by programming the smart contract to defer to a specific resolution process. One method is to designate a trusted, mutually agreed-upon third-party arbiter who is given a special cryptographic key to pause or modify the contract's state.

A more decentralized approach involves integrating with platforms like Kleros or Aragon Court, where a pool of token-holding jurors is randomly selected to vote on a dispute. The contract is programmed to automatically execute the outcome of the jury's decision, releasing funds or assets accordingly.