Tens of trillions in US dollars is transacted annually through contracts. If transaction costs account for 2%-3% of those transactions’ value, then contract transaction costs could total to up to one trillion dollars annually. A potential benefit of smart contracts is that they can reduce contract transaction costs, such as the cost of dispute resolution and risk of non-performance. Many types of multisided platforms will operate using smart contracts to achieve that benefit. These platforms’ existence requires that they have a human third-party, such as Smarter Contract, that resolves the disputes on their platforms. Computer code cannot resolve disputes.
Smarter Contract allows any smart or traditional contract dispute to be resolved without accessing the costly traditional judicial system. Specifically, if there is a dispute over the value of a contract variable (e.g. whether a service was performed as requested), then the Smarter Contract process provides an expert determination of that value to the contract. As oracles feed smart contracts with streams of public data, so does Smarter Contract feed contracts with expert determinations of fact that resolve disputes.
First, Smarter Contract attempts to broker an agreement among the parties on the facts pertinent to enforcement of their contract. Second, for all disputed facts, the parties share information with experts, who make a determination on the facts. Third, the determined facts are sent to the contract, which generates an outcome based on them.
Smarter Contract enforces smart contracts. Other platforms enforce English-language contracts, which is what the traditional judicial system does.
Cost and Uncertainty of Enforcing English-Language Contracts.
On other platforms, the interpretation of English-language contracts is governed by law. Law is complex, vague, and subjective; varies from culture to culture; and depends on precedent. Law can either be casual (e.g. the law of common sense) or rigorous (e.g. English common law). In either case, if we allow humans to make a subjective judgment about what they believe is a lawful outcome of an English-language contract, we not only incur the high COST of human interpretation, but we also increase the UNCERTAINTY about whether the contract will be interpreted the way its parties intended.
Benefit of Enforcing Smart Contracts.
The interpretation of smart contracts can be more certain and lower cost because it is governed by computer code. Compared to humans, computers are lower cost and produce more certain outcomes. That said, although smart contracts are governed by computer code, determinations of fact (e.g. percent of work completed) must be made by humans and fed into smart contracts. The point is that Smarter Contract (a) avoids the need for humans to interpret law and (b) minimizes the scope of human involvement. That reduces cost and increase certainty.
- Experts only determine the values of contract variables that are in dispute and do not spend the time required to arbitrate the full smart contract.
- The dispute resolution fee is based on the number of characters of text and code shared with the experts. Simple disputes are therefore very low cost.
The following aspects are conducted in an autonomous, decentralized manner:
- Assignment of experts to disputes.
- Evaluation of experts, which is done through a double-blind peer-review process.
- Pricing of dispute resolution services.
- Determination of whether a dispute resolution process was corrupted and needs to be re-started from scratch.
- Every other aspect of the system operates without centralized governance, except for the selection of experts who join the platform. Once experts pass an initial, manual screening process and join the platform, no centralized action can prevent them from being assigned to disputes.
2.5 million USD
50 million, minus tokens given away in the token bonus program.
To be announced.