Plz No Cat: The Future of Crypto Disputes Is Being Decided By Doges

Could you sneak a cat past the doges?

That's the idea behind a new game launched by Kleros, an ethereum-based startup that raised $2.5 million in the first round of its crypto token sale in July. Called "Doges on Trial," the game is designed around the principle of crypto-economics: the theory that a properly designed system of incentives based on cryptocurrency tokens will yield the desired user behavior.

In this case, Kleros wants to incentivize people using the platform to curate a list of images ... of doges.

For the uninitiated, "doge" is a meme of an apprehensive-looking Shiba Inu. It's captivated the internet, giving birth to a particular method of mangling English ("so scare," "why this happened"), as well as a dedicated cryptocurrency, dogecoin, whose community is known for its playful antics.

So, while you might expect "Doges on Trial" to be much the same – just a fun activity to bring some lightheartedness to crypto – actually Kleros has much bigger, more serious use cases in mind for its decentralized dispute resolution protocol.

For instance, spotting fake news, resolving disputes on gig economy and e-commerce platforms, and helping ratings platforms curate their lists are all within the scope of Kleros' mission.

The company's founder and CEO Federico Ast told CoinDesk:

And needed it is. Recently dispute resolution, or more broadly governance, has been top of mind for many blockchain entrepreneurs and enthusiasts – especially for a new rash of protocols, think EOS, whose methods for making decisions that affect many stakeholders are opaque, to say the least.

Rather than building their own dispute resolution mechanisms, though, Ast hopes projects will delegate that aspect to Kleros.

And the way that Kleros, which is participating in the Thomson Reuters Incubator program right now, is proving it has the right crypto economics for the job is by running a cute little game in which users are rewarded for slipping forbidden cat images into a collection of doges.

The goal, Ast said, is "to have as many people as possible coming to test this and trying to break it" through bribery and other methods that bad actors would inevitably try to use against Kleros if it were deployed for higher-stakes purposes.

Remaining relatively quiet about the game that debuted on ethereum's live blockchain, or "mainnet," in July, the company is now ready to start communicating the system's effectiveness to the broader ethereum community, said Ast.

Backing up, it's worth noting how the doge proof-of-concept has worked.

Over the course of the past couple months, a few dozen users, mostly investors in the platform's native token, pinakion (PNK), have submitted more than 100 images for judgment and selection.

It works like this: a user submits their image – a doge, cat or otherwise – to the list along with a deposit of ether, ethereum's native token. The image sits in limbo for a day, during which time other users can challenge it by submitting an ether deposit equal to the submitter's.

If no one challenges it, the image is added to the list and the submitter's deposit is returned.

At the end of the trial (for which no date has yet been set), successful meme-submitters will split a reward of 1 million dogecoin.

If the image is challenged – because it lacks a doge, is a duplicate, or contains a cat – it goes before a jury of three users, who have made a deposit of Kleros' PNK token.

The jury then makes its decision to reject or approve the image. If you are a jury member that votes in dissent with the majority, you forfeit some PNK tokens, which get redistributed to the majority-voting jurors.

If the meme is accepted, the challenger's ether deposit goes to the submitter, minus a fee for the jurors. If it's rejected, the challenger gets the submitter's ether deposit, also minus the fee.

The submitter of the image can appeal the decision, however, by making another ether deposit. Then, the same process as above repeats itself, but with seven jurors. And after that, the submitter can appeal the decision with a jury of 15.

The reason for increasing the number of jurors with each round of appeals, Ast explained, is that bribing a majority of the jurors gets more expensive.

"It's going to cost you a lot of money to keep on attacking the system and to win," Ast said.

One user, Tristan Roberts, tried this route, posting a picture of a cat with an offer to pay jurors 0.3 ether to break the rules. Roberts told CoinDesk that he found it "practically impossible to keep bribing the jurors, [since] the amount of ETH I would win would be less than the amount needed to bribe them."

"All in all, I'm impressed with how the game theory dynamics worked out; I wasn't able to break it," said Roberts.

Although, at least one user does appear to have sneaked a cat onto the list. According to the Doges on Trial rules, they're entitled to receive two ether and a CryptoKitty for beating the system. The ultimate decision as to whether the picture below contains an illicit cat will be left up to Coopérative Kleros, the legal entity behind the platform's development.

If Kleros proves its mettle with Doges on Trial, Ast said, the platform could serve as an arbitration layer for swathes of the blockchain ecosystem.

A number of cryptocurrency projects in different niches, such as e-commerce and gaming, are building out their own dispute resolution mechanisms, he explained, adding:

And already, some are interested.

In March, the Kleros team said it would integrate the platform with Ink Protocol, a cryptocurrency payment and reputation system built on ethereum. Ink's native token XNK has replaced the credit system on Listia, an e-commerce site with 10 million registered users, in which individuals trade goods among themselves using credits rather than buying them from vendors.

The same month, Kleros announced a partnership with Dether, which allows users to buy and sell cryptocurrencies locally for cash.

For certain use cases, though, Kleros faces competition. Civil, for example, has developed a similar crypto economic system targeted specifically at identifying and weeding out fake news.

And the decentralized prediction market Augur shares Kleros' goal of "keeping people honest on the blockchain through game theory," according to Kleros crypto economics researcher William George, in a recent blog post.

Still, Ast remains optimistic that tons of use cases exist for the platform.

"There are lots of use cases of Kleros that we don't even know [about yet] ... people are going to find them eventually," he said.

Doge meme images via DogesonTrial.dog