How Do Decentralized Arbitration Systems Work for Smart Contracts?
Decentralized arbitration systems, like Kleros, use a crowdsourced network of jurors who are incentivized to review evidence and rule on disputes. Parties submit a dispute, and jurors are randomly selected and compensated for making correct, consistent rulings.
This provides a human layer of judgment for complex disputes that cannot be resolved by code alone, without relying on traditional courts.
Glossar
Decentralized Arbitration Systems
Systems ⎊ Decentralized arbitration systems utilize game theory and token incentives to create impartial, cryptographically verifiable dispute resolution processes for on-chain disagreements.
Decentralized Arbitration
Mechanism ⎊ ⎊ Decentralized arbitration leverages smart contracts to resolve disputes within cryptocurrency ecosystems and derivatives markets, functioning as a trustless alternative to traditional legal systems.
Arbitration
Mechanism ⎊ Arbitration, within cryptocurrency, options trading, and financial derivatives, represents a structured process for resolving disputes outside of conventional court systems, leveraging pre-agreed contractual terms.