How It Works

The complete dispute resolution process from creation to execution

How Kleros Court Works

Kleros Court resolves disputes through a structured process that ensures fairness, transparency, and economic alignment. This page walks through each stage from dispute creation to final execution.

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The Dispute Lifecycle

1. Dispute Creation

   An arbitrable application encounters a contentious situation and needs resolution.

   • The application creates a dispute in Kleros, providing case details
   • Arbitration fees are paid to incentivize jurors (the protocol takes no commission)
   • Court selection is specified through the extraData parameter
   • The dispute enters the Evidence Period
2. Evidence Period

   Both parties submit evidence to support their case.

   • Evidence can include text explanations, documents, images, or other materials
   • All evidence is stored permanently and transparently on-chain
   • Deposit requirements prevent spam submissions
   • The dispute template defines what information is needed
3. Juror Selection

   Jurors are randomly drawn from those who have staked PNK in the relevant court.

   • Selection probability is proportional to the amount of PNK staked
   • The Sortition Module uses a three-phase system to prevent manipulation
   • Selected jurors receive notification of their drawing
   • A portion of each juror’s stake is locked as collateral
   • All required jurors must be drawn before proceeding
4. Voting Period

   Jurors review evidence and cast their votes.

   Current Implementation (Commit-Reveal):

   • Jurors commit a hash of their vote during the Commit Period
   • Votes remain hidden until the Reveal Period
   • Jurors must return to reveal their vote with justification
   • Failure to reveal results in stake loss

   Coming Soon (Shutter Integration):

   • Single-transaction encrypted voting
   • Automatic decryption via threshold cryptography
   • No manual reveal required
5. Appeal Period

   Parties can challenge the outcome if dissatisfied.

   • Anyone can fund an appeal to support a particular side
   • The opposing side can counter-fund to defend the original outcome
   • Appeals increase the number of jurors (typically doubling plus one)
   • Large or contentious cases may jump to a parent court
6. Execution

   Once appeals are exhausted, the ruling becomes final.

   • The arbitrator contract calls back the original application
   • Coherent jurors (who voted with the majority) receive rewards
   • Incoherent jurors lose a portion of their staked PNK
   • The ruling is enforced automatically by the smart contract

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The Phase System

The Sortition Module uses a three-phase cycle to prevent manipulation of juror selection:

┌─────────────┐          ┌─────────────┐          ┌─────────────┐
│             │          │             │          │             │
│   Staking   │──────────▶  Generating │──────────▶   Drawing   │
│             │          │             │          │             │
└─────────────┘          └─────────────┘          └─────────────┘
       ▲                                                 │
       │                                                 │
       └─────────────────────────────────────────────────┘

Staking Phase

Best time to adjust your stakes

• Stake changes take effect immediately
• Jurors can update their stakes in various courts
• Duration varies based on dispute activity

Generating Phase

Random number being generated

• A random number is requested and becomes visible on-chain
• Stake changes are recorded but won’t apply until next Staking phase
• Duration depends on the randomness source

Drawing Phase

Jurors being selected

• Jurors are drawn using the random number and current stake distribution
• Stake changes remain delayed
• Continues until all disputes have jurors or maximum time elapses

If you stake during Generating or Drawing phases, your changes won’t affect current selection chances. The Court UI shows whether your stakes are “Current” or “Delayed.”

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Dispute Kits

Kleros V2 introduces modular dispute resolution through pluggable Dispute Kits:

Kit	Description	Use Case
Classic	Traditional majority voting where the option with most votes wins	Standard disputes
Ranked Choice	Jurors rank multiple options by preference	Nuanced multi-option decisions
Complex Question	Advanced mechanisms for sophisticated decision-making	Multi-faceted disputes
Shutter-Enabled	Threshold encryption for enhanced vote privacy	Privacy-sensitive cases
PoH-Gated	Requires Proof of Humanity verification	Sybil-resistant voting

Each court is compatible with specific dispute kits. When creating disputes, arbitrables can select desired features rather than specific kits, simplifying integration.

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Voting Mechanics

Current: Commit-Reveal

1. Commit Phase

   Choose your vote, generate a salt, and submit your commitment transaction. Keep your vote secret and remember your salt.

2. Reveal Phase

   Return to reveal your vote with justification. Failure to reveal means losing your locked PNK.

Future: Shutter Encrypted Voting

Shutter Network integration is completed on testnet and currently resolving implementation issues before production deployment.

• Single-transaction private voting
• Votes encrypted using threshold cryptography
• Automatic decryption at the appropriate time
• No manual reveal required
• Prevention of vote copying and bandwagon effects

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Rewards and Penalties

For Coherent Jurors (voted with majority)

You receive rewards from two sources:

1. Arbitration Fees: ETH or whitelisted ERC20 tokens paid by dispute creators, divided among coherent jurors
2. PNK Redistribution: Penalties from incoherent jurors, divided among coherent jurors

Reward Formula:

jurorReward = (totalFees / numberOfCoherentVotes) × degreeOfCoherence
pnkReward = (totalPenalties / numberOfCoherentVotes) × degreeOfCoherence

For Incoherent Jurors (voted against majority)

• Lose a portion of staked PNK (determined by the alpha parameter)
• Forfeit arbitration fee rewards

Reward Example

Scenario: Case has 5 jurors with 0.05 ETH fee per juror (total: 0.25 ETH). 3 jurors vote coherently, 2 incoherently.

Each coherent juror receives:

• ETH: 0.25 ÷ 3 = ~0.083 ETH
• PNK: (2 × locked PNK amount) ÷ 3

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Staking Rewards (KIP-66)

Staking rewards are fully implemented in the smart contracts and will be enabled once V2 officially exits beta. This community-approved governance proposal provides additional incentives separate from traditional arbitration fees.

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Security Features

Enhanced RNG System

The random number generation system includes comprehensive fallback mechanisms:

• Primary: Chainlink-based random number generation
• Fallback: Alternative entropy sources when primary fails
• Verification: Multi-source randomness verification
• Reliability: Ensures juror selection proceeds even during external service disruptions

Juror Fraud Protection

• Pre-reveal protection: Revealing votes early allows anyone to report you and claim a portion of your stake
• Cartel protection: Coordinated voting can be detected and penalized
• Evidence of coordination can be reported with serious stake penalties

Never share your vote choice before the reveal phase, and never coordinate with other jurors. This maintains system integrity and protects your PNK.

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What’s Next?

Court Hierarchy

Understand court structure and specialization

Appeals

Learn how appeals and escalation work

Become a Juror

Step-by-step staking and voting guide