AwesomeCoin Crowdfunding Massacre — Juris Platform User Examples

Welcome to the Juris Project. We’re building a mediation and arbitration protocol for blockchain smart contracts. Start here if you want to know more about the project, and check out post one (“Juris Protocol Use Case — Ziggy Stardust”) or post two (“100,000 Twitter Bots, Bought on the Blockchain”) in the series t to start smaller. Continue on for an example from our whitepaper of how it will work.

Crowdfunding The World

By now, the general public is aware of the idea of crowdfunding. US law has caught up to the extent that regulations have been rolled out allowing a restricted version of crowdfunding in exchange for equity. And in this world, nearly all securities contracts use an arbitration clause, or agreement. We already looked at how things worked with Ziggy, described above. It isn’t difficult to extrapolate the implications for a Kickstarter- like platform, built via blockchain to maximize efficiency. But because ICOs are all the rage, lets take a look at that type of crowdfunding, in which the crowd isn’t quite as large. Just remember, because of how blockchains work, this could happen for one hundred or a thousand people as easily as ten we talk about.

The Simple Agreement for Future Tokens (SAFT) has quickly become a popular funding mechanism for pre-sale Token Generation Events. Sometimes they’re also called Initial Coin Offerings, or ICOs. They are a tool for the early sale of the tokens that will be generated and used by technology protocols for which funding is needed. They require a certain degree of interpersonal trust between founders and investors, as they are essentially a promise to produce and deliver something at a future date. But what if you want to fund a Cambodian team with a promising idea, and you can’t do a background check? What about an anonymous, distributed team? Because of this trust component, the SAFT is a less effective device for unproven teams or inexperienced (or crowd) investors.

The SCAFT?

Luckily the system is already primed for a trust-less solution, a SAFT built via smart contract, a SCAFT: Smart Contract for Future Tokens. But, like we’ve already covered, even smart contracts can’t always be perfect. Let’s take a look:

Ten investors would each like to pre-purchase 10,000 ETH of AwesomeCoin. Each puts their ETH in to a smart contract which has the following expected behavior: it will release .5% of its contents every day until it receives [the correct number of tokens] from [specific wallet address] at which point it will dump all of the remaining funds into the company’s account.

Oops…

Due to a technical problem while preparing for the token generation, the AwesomeCoin developers lose access to [specific wallet address]. This means the smart contracts will never trigger as specified in the SCAFT code. Without intervention, AwesomeCoin will never receive the full balance of their funds, and the investors will never receive their tokens. AwesomeCoin does not want to disrupt their timeline, so they push ahead, issue the tokens and distribute tokens manually from their new address, as promised, to the investors. Using the Juris self mediation tools, the developers propose that the money be transferred to their account even through the technical terms of the smart contract were not satisfied. Using the same tools, seven of the investor’s signal their assent; the developers signal their assent, and the transfer executes. Two of the investors invoke the SCAFT’s cancellation terms. Those contracts are frozen, and all of the money left in those accounts is moved into a Juris CDK generated holding account. The parties are unable to talk it out, and they trigger a SNAP Judgement, after which point one of the investors signals their willingness to release funds. Both parties sign off, and the funds are released.

The remaining investors choose to escalate the case further. This signals Juris to begin formation of a panel. The smart contract doesn’t detail what kind of mediation they would like, so default settings are used. The system guides the parties through the process to select a panel of three High Jurists. This panel hears arguments and examines evidence. At the end of that period, the judges find 2-to-1 for the entrepreneurs. Using their dispute mediation tools, without the consent of the investors, they transfer the remaining funds to the entrepreneurs’ account. The panel members split the mediation fee, and rate each other’s performance (those ratings are used to update their reputation scores).

100,000 Twitter Bots, Bought on the Blockchain – Juris Platform User Examples

In which there is a disagreement regarding “followers” and “bots.”

Welcome to the Juris Project. We’re building a mediation and arbitration protocol for blockchain smart contracts. Start here if you want to know more about the project, and check out the first post in this series “Juris Protocol Use Case — Ziggy Stardust”. Continue on for an example from our whitepaper of how it will work.

100,000 Twitter Bots

Alfred, an aspiring London comedian, is looking to drastically grow his small presence on Twitter to reach new audiences. He currently has around 20k followers and dreams of hitting the low six figures. On CoinLancer, a popular Ethereum-based freelancing marketplace, he finds Barbara: a self-proclaimed social media guru in Chicago. Barbara advertises that for 4 ETH she can grow anyone’s Twitter follower count by 100k followers within 30 days. Alfred’s sold: the price per follower sounds much better than any other offer he’s seen. CoinLancer’s system helps Alfred enter into a smart contract with Barbara, set to programmatically test Alfred’s follower count in 30 days.

30 days later, Alfred’s follower count is at 125k — and rising. The test clause of the smart contract becomes active, and confirms that his follower count has surpassed the success criteria to pay out to Barbara.

To Alfred’s horror, 3 days later, he receives an email from Twitter notifying him that 80k of Alfred’s 125k Followers were deactivated. His Follower count now falls drastically short of Barbara’s promise. As far as he’s concerned, this isn’t what he paid for. He contacts Barbara. As far as she’s concerned, she’s fulfilled the contract as it was written and has rendered her services as agreed: she got him his 100k followers.

Relieved that CoinLancer suggested he include Juris CDK in the smart contract, Alfred activates the adjudication function in his Juris dashboard. All the Ether in the contract is temporarily frozen, and a request is sent to Juris to begin arbitration. He and Barbara have already talked about their disagreement, and they’re getting nowhere, so Alfred decides to escalate to a SNAP Judgement.

Worldwide, holders of JRS receive notification of a new contract in need of arbitration. As they enter their online Juris dashboard and examine the ticket, they’re presented with case details provided by Alfred and Barbara, as well as a copy of the smart contract in question and any associated logs. Deng, a JRS holder in Singapore, reviews the initial case brief. He’s unfamiliar with bot protocols and Twitter, and he’s not confident that he will be able to contribute to the discussion. He decides this case isn’t for him. But Juan, a social media manager in Acapulco, has dealt with this before — personally. He, and thousands of other token holders, accept the ticket. He reviews the case and contract, and swiftly casts his first vote. Within a few days, thousands of votes have been cast worldwide, discussions have taken place, and short opinions have been written and submitted.

Alfred awakes the next day and, to his delight, the SNAP has already rendered a judgement. His dashboard reports back that 64% of the High Jurists sided with him, 73% of the Good Standing Jurists. As a token holder — and occasional Jurist himself — he knows that’s a very positive outcome for him. He is also able to see a record of discussion, and the opinions submitted along with rounds of voting. He knows Barbara will also see the same.

He submits to assent to the favorable opinion cast by the SNAP Jurists. If Barbara assents also, the case will be marked resolved and he’ll be refunded his Ether. He and Barbara can part ways. He knows that if she doesn’t, a second round of arbitration, this time binding, may happen. Seeing thousands of votes rendered in Alfred’s favor, Barbara concedes and assents to the decision. The Ether tied up in the contract is returned to Alfred, and the JRS used to power the arbitration function in the contract is divided equally amongst all the arbiters who took part in the SNAP.