Blockchain Online Dispute Resolution Projects
* Article: Decentralized Justice: A Comparative Analysis of Blockchain Online Dispute Resolution Projects. By Yann Aouidef, Federico Ast and Bruno Deffains. Front. Blockchain, 16 March 2021 | doi
"Decentralized justice is a new approach to online dispute resolution that combines blockchain, crowdsourcing and game theory in order to produce resolution systems which are radically more efficient than existing methods."
In recent years, the digital economy has experienced a growing number of transactions. Traditional dispute resolution methods such as court and international arbitration are ineffective for handling a large volume of small value claims across national borders. Decentralized Justice is a new approach to online dispute resolution that combines blockchain, crowdsourcing and game theory in order to produce resolution systems which are radically more efficient than existing methods. This article offers a review of the decentralized justice industry and of the key players participating in it. It presents a number of key dimensions of the industry and reviews the mechanism design choices made by these different platforms. Finally, it discusses a growth hypothesis for the industry and how it may grow in the future."
"The goal of this article is to provide a descriptive and comparative review of three projects that are playing a pioneering role in the decentralized justice industry: Kleros, Aragon and Jur. We will analyze similarities and differences in the design choices made by their respective teams and how this may impact the evolution of the industry. In the second section, the paper discusses the nascent industry of decentralized dispute resolution platforms within the framework of decentralized justice. The third and fourth sections describe the three most prominent platforms along a set of characteristic dimensions and present differences, similarities between the platforms and their limitations. In the last two sections, we consider possible adoption scenarios for decentralized justice in general and dispute resolution in particular.
From the conclusions:
"The global legal market is worth over one trillion and the blockchain market is estimated at $1.5 billion. In May 2020, the combined market value of decentralized justice platforms was still under $10 million and the combined number of users still under 1,000. This evidentiates that the decentralized justice industry is still in its early days.
But the rapidly rising volume of low value digital transactions promises a growing market for an efficient and fair method for dispute resolution. For instance, the value of cross-border payments worldwide in 2019 reached $2.58 billion and is expected to reach $3.56 billion in 2022. This is expected to increase as a larger number of transactions start to be conducted in cryptocurrency, bringing a near frictionless experience to international payments.
In this article, we have defined the industry of decentralized justice, introduced the key players in the market, presented a number of key dimensions of the industry and discussed different options on how the market might grow and evolve in the future.
The world economy is rapidly changing and requires a new institutional framework to secure transactions. This announces radical changes in legal practices. As industry expert Richard Susskind said: “The legal industry will change more in the coming 20 years than in the previous 200”.
Naturally, these changes will generate important debates from a legal perspective, where for example dissenting judgments are recognised as having value for legal development. What makes blockchain technology a powerful tool for promoting disintermediation and decentralised coordination (i.e. a trustless technology) could also constitute one of its greatest limitations for some commentators (Katsh and Rabinovich-Einy, 2019a), especially when it comes to collective deliberation. Collective action is mainly about reaching a compromise between conflicting interests and values whereas blockchain technology operates via distributed consensus and an exit-based conflict resolution system. Thus, it is important to consider how decentralized justice could promote the general interest, produce common goods and create a collective sense of justice through a more market-based approach to conflict resolution.
An important part of this transformation is likely to come from the field of machine learning and the use of legal analytics. Another part will come from the emerging field of decentralized justice which incorporates blockchain, crowdsourcing and mechanism design into dispute resolution procedures.
This article has reviewed different design choices made by the pioneers in the industry of decentralized justice. Behind every decision, there are trade-offs and path dependency effects that will influence the strategies of these platforms in the future."