Prakash Pandey

DECENTRALIZED DISPUTE RESOLUTION INFRASTRUCTURE www.jur.io WHITE PAPER V.0.3 This Document is not a Prospectus PLEASE READ THIS DISCLAIMER SECTION CAREFULLY. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR LEGAL, FINANCIAL, TAX, OR OTHER PROFESSIONAL ADVISOR(S). The information set forth below may not be exhaustive and does not imply any elements of a contractual relationship. While we make every effort to ensure that any material in this white paper is accurate and up to date, such material in no way constitutes the provision of professional advice. Jur Network does not guarantee, and accepts no legal liability whatsoever arising from or connected to, the accuracy, reliability, currency, or completeness of any material contained in this white paper. Investors and potential JUR token holders should seek appropriate independent professional advice prior to relying on, or entering into any commitment or transaction based on, material published in this white paper, which material is purely published for reference purposes alone. JUR tokens will not be intended to constitute securities in any jurisdiction. This white paper does not constitute a prospectus or offer document of any sort and is not intended to constitute an offer of securities or a solicitation for investment in securities in any jurisdiction. Jur does not provide any opinion on any advice to purchase, sell, or otherwise transact with JUR tokens and the fact of presentation of this white paper shall not form the basis of, or be relied upon in connection with, any contract or investment decision. No person is bound to enter into any contract or binding legal commitment in relation to the sale and purchase of JUR tokens, and no cryptocurrency or other form of payment is to be accepted on the basis of this white paper. CONTENTS 1. Executive summary Vision: a world where trust in business relationships is guaranteed Mission: the New Legal Era Overview: fixing a broken legal-economic system Market Competitive landascape: partial solutions 8 8 8 9 9 10 2. Background/Industry & Challenges 11 3. How Jur works 19 4. Use Cases for Jur 22 5. Jur Ecosystem 25 6. Business Model 26 Inefficient dispute resolution in business relationships Problems With Traditional solutions How Jur revolutionizes the entire contract and dispute resolution industry Transparency Decentralization Jur: A Consensus-Based Dispute Resolution Infrastructure On-chain Layer: Multi-purpose Consensus-Based Dispute resolution Arbitration contract (AC) Arbitration and escrow contract (A&EC) Hubs Off-chain Layer Jur Platform Smart Legal Agreement Injector (SLAI) Smart Legal Agreement Builder (SLAB) Smart Legal Agreement Marketplace (SLAM) Oracles Groups (OG) Voting Web Interface (VWI) APIs for third-party access 2.0 marketplace platform and blockchain smart contracts Example of Arbitration and Escrow Contract Example: Alice and Bob Example Of Reward distribution OTC transaction Guarantees Intangible services: one to one Crypto-related and ICO service Contracts ICO Investment contracts Ensure transfers of registered mobile goods (e.g., Cars, Boats) Guarantee real estate transfers: deposits Ensure sales of web domains, with no intermediate platforms and related fees Guarantee the purchase of intellectual property Business to Business - 19 20 21 - 26 Business to Consumer Marketplace Financial service Business Benefits of Jur Organization/Governance Model - 7. Technology 29 8. Marketing 33 9. KYC 36 10. Roadmap 37 11.Team 38 Appendix 1 - How the Oracles votes 44 Blockchain Ethereum EOS Cardano Jur strategy Technical Support Coin / Token Economy Token Specifications Use Cases of Jur Token Token Sale Token Distribution Fund Distribution Target Market Medium-Sized Enterprises Professionals and Proprietors Big Digital Enterprises Competitive Landscape Go To Market Strategy Blockchain Legal Tech Alliance Adoption Drop Core Team Advisors Scientific Committee Open Vote - Self-selection of Oracles Vetted Oracles - Closed Hubs Universal principles of the voting system The vote count is visible Majority tokens are matched with minority tokens in chronological order The minimum vote is 1% of the current total vote Both parties in the dispute propose a solution - - 38 40 41 - Only JUR tokens can be used to vote No fees Additional votes for the majority side are not allowed when the majority reaches 200% of the minority The standard voting period is 24 hours, but parties can choose their own time limit To open a dispute, you must stake 1% or more of the contract value on your proposition Votes are irreversible The reject vote Special principles of voting for closed hubs Selection of voters Only Certain JUR Tokens Eligible Maximum Token Concentration Limits on Total Contract Value Maximum ratio between the value of contracts in dispute and tokens that are allowed to vote - Appendix 2 - How do Hubs work? 48 Appendix 3 - Game theory and its implementation 52 Appendix 4 - Voting system resilience and borderline case scenarios 58 Appendix 5 - Smart Legal Agreements Benefits 63 Characteristics of Hubs Absence of Fees in the Hubs How A Hub Differs From A Conventional Arbitrator Resilience features of the Hubs Whale Attack resistance Bribe resistance Pro buyer - pro seller Hub A formal model to represent the tendency to Justice of the Jur System Why will the majority choose the fairest resolution? Outcome Grid - Majority Choice vs Alan Choice Expected earnings of voters and incentive to vote as soon as possible Jur basic voting system resistance to corruption Resistance to unfair self-interested voting by attack by one of the dispute parties Sybil attack resistance Whale attack resistance Why there will be unfair votes cast, even without corruption Jur’s resilience under challenging scenarios System stability in the absence of votes for the unfair proposition Weak voters: self-selection Reward vs gambling in Oracles activity Token Volatility and Votes Wisdom of the crowd and “beauty contest effect” Lack of interest in voting Last - minute vote upsets Very small difference in proposed resolutions Clear majority established Disputes that involve subjective issues - - - Abstract The current legal structure and dispute resolution solutions are plagued with inefficiency, high cost, and delays. Smart contracts offer an efficient way to make agreements, but they don’t include a mechanism to resolve disputes when they arise. Jur proposes a new dispute resolution system that utilizes blockchain technology to instill transparency and immutability in the legal industry. Jur’s dispute resolution solution uses a series of smart contracts to provide an incorruptible decentralized oracle that delivers fair and fast dispute resolution at near zero cost. Additionally, Jur provides a tool that allows users to create smart legal agreements and deposit funds into escrow efficiently with the use of smart contracts. SMART LEGAL AGREEMENTS • CONSENSUS BASED DISPUTE RESOLUTION • ESCROW DEPOSIT AND DIRECT PAYMENT OF SETTLEMENTS • DECENTRALIZED LEGAL SYSTEM JU R Jur creates secure economic connections between individuals and businesses using the blockchain. JUR is the new decentralized legal system that creates trust between parties in the global economy Jur A.G. Grabenstrasse 25 Baar - Zug (Switzerland) CHE‑--www.jur.io Updated on July 2nd 2018 1. Executive summary Vision: a world where trust in business relationships is guaranteed We envision a world of frictionless transactions, a global economy in which everyone can make clear, legally-binding agreements easily and enter these agreements with confidence that if a dispute should arise, it will be resolved fairly. The current legal systems and tech solutions are not efficient. Costly and slow contract creation and dispute resolution limit economic growth and innovation. Big businesses spend billions on inefficient dispute resolution. Lacking cost-effective dispute resolution, small businesses and consumers often have no choice but to suffer maddening injustice when small deals are broken in everyday life. We are building the new legal infrastructure on the blockchain, a cost-effective, decentralized system that will solve the problem of trust and allow unimpeded economic growth and innovation. Jur will allow user to create reliable relationships at any scale, from tiny, simple transactions to complex agreements involving huge sums. Mission: the New Legal Era Jur offers a more efficient legal contract and dispute resolution system that delivers reliable results and immediate enforcement to replace the current inefficient, costly, slow system. Jur is built on the blockchain to guarantee tamper-proof reliability. Jur uses the principles of game theory to harness the power of the wisdom of the crowd. Economic incentives motivate voters to help resolve disputes at near zero cost to the parties in dispute and guarantee reliably fair results. Jur creates a new dimension of trust in business relationships based on easy-tocreate, effective Smart Legal Agreements backed up by a near-zero cost, swift, and fair decentralized dispute resolution system enforced on the blockchain. Futurists predict that eventually smart contracts will replace conventional legal agreements in many areas, but without a better dispute resolution system, smart contracts are only a partial solution. In the near term, Jur will be very useful for simple agreements. In the medium term, Jur users will create specialized Hubs with voters who are qualified to resolve disputes over more complex agreements. In the long term, Jur will allow creation of more complex agreements composed of a series of linked contracts. Hubs will continue to evolve as economically motivated users develop resources for increasingly specialized markets so that Jur can offer an alternative for an expanding universe of agreements. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 8 1. Executive summary Overview: fixing a broken legal-economic system The current legal framework and alternative dispute resolution options are inefficient, slow and costly. When someone acts in bad faith, an agreement is only as good as the dispute resolution system that backs it up. In some cases, it is clear from the outset that the cost of resolving a dispute will exceed the gains. We will discuss the size of the market impacted by this problem, and the competitive landscape that offers innovative but partial solutions. Then we’ll delve deeper into the problem to see why many people in these markets will be highly motivated to use the Jur system. We’ll show how current options often fail to deliver good results, and then we’ll introduce our solution. Jur offers a new legal dispute resolution platform that works on the principles of game theory and is built on the blockchain. Jur also offers a system for creating smart contracts that are legally binding, which we call Smart Legal Agreements. Unlike centralized legal bodies, Jur relies on the judgment of its community for settling disputes. Game theory shows that the economic incentives of the Jur system will motivate voters to deliver reliably fair decisions. The system uses a series of smart contracts to create an incorruptible decentralize oracle. Jur allows involved parties to get a resolution in as little as 24 hours at near zero cost. Market 1.4 trillions 3 /mo. billions 1.7 trillions US freelance OTC crypto-currency Under arbitration economy transactions in 2014 The market for Jur can be conceived of in two segments: users who have no viable current dispute resolution option, and users for whom Jur provides a better alternative than their current choice. Parties to small disputes regarding amounts under $1,000 rarely have a cost-effective way to resolve disputes and enforce agreements, if they cannot simply do so amicably. This size of this unserved market is hard to estimate. But because Jur can deliver justice at the price of gas cost for a few transactions on the Ethereum blockchain, a vast new market can now choose to register their agreements and include reliable dispute resolution. Roughly a trillion dollars of economic activity falls into a gray area; several billion small deals, some with expensive but viable dispute resolution. In 2017 the US freelance economy involved 3 billion freelancer © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 9 1. Executive summary contracts and 1.4 trillion in earnings, for an average contract value of around $45011. OTC crypto-currency transactions may involve larger sums, but in many cases parties may not find current dispute resolution systems suitable. More than 3 billions a month are traded2. ICO related agreements and contracts for freelance work to support ICOs are likely early adopters of JUR. The Global Arbitration Review reported that 1.7 trillion dollars were under arbitration in 20143. That is only the amount in dispute. And that doesn’t include contract disputes in conventional courts. The economic activity that results in those disputes is many times larger. Ultimately, as Jur continues to grow in complexity through User created hubs, Jur can provide a safe platform for most of the economic activity in the global economy, many trillions of dollars. Jur can eventually replace the current contract and legal dispute resolution system even for the very complex cases at this scale. Jur begins in simplicity, but it is not limited by it. Jur is simply a better tool because it is a decentralized solution. What lawyers and expert have built into byzantine complexity thanks to the rigid nature of centralized systems can be replaced by lawyers and experts building better solutions, operating in a free decentralized system that allows the market to motivate and choose creative solutions. Competitive landascape: partial solutions Smart contracts and dispute resolution are very competitive industries with both centralized and decentralized competitors. Mattereum, Agrello, Jury Online, and Kleros are among projects investors could consider to be competitors to Jur. All are blockchain-based solutions focusing on simplifying the smart contract creation process or offering dispute resolution services. While each of these emerging systems seeks to address parts of the same problem, none of them completely overlap Jur’s product offerings, nor do they offer as complete a solution. We will discuss theses systems in further detail later in the white paper. 1. Freelancers may have dispute resolution systems available if they use platforms, but platform fees are high. Platforms may choose to outsource their dispute resolution to JUr through our API. These are typically agreements that could use the base layer of Jur or a very simple Hub for dispute resolution at almost zero cost. 2. www.reuters.com 3. www.fticonsulting.com © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 10 2. Background/Industry & Challenges Inefficient dispute resolution in business relationships The economic health of a given community is dependent on its legal and bureaucratic efficiency. Today’s legal system is not efficient for individuals, professionals, and companies. If a dispute arises, there are high costs for the parties. The possibility of a costly dispute makes businesses wary of each other, creating friction that penalizes the entire economy. Legal dispute resolution and the ability to make and enforce legal contracts is critical for the proper functioning of an economy. Additionally, good enforcement procedures curtail the uncertainty involved in commercial relationships and inculcate trust among investors.4 In contrast, when commercial transactions are overwhelmed with cumbersome and bureaucratic dispute resolution and legal enforcement procedures, the overall trust in the market declines. The banks are forced to limit lending because of the uncertainty involved in debt collection, which in turn encourages inefficient cash-only transaction policies within the economy. As a result, an economic environment characterized by slow growth, development, and lower investments settles in. Studies show that businesses operating where courts are more effective have greater access to credit and are larger and more efficient than businesses operating under less effective court systems5. Confidence in court systems also increases willingness to invest. Europe & Central Asia 489,9 26,2% Time Cost OECD High Income 577,8 21,5% Time Cost Middle East & North Africa 638,5 24,4% Time Cost East Asia & PaciÞc 565,7 47,3% Time Cost Latin America & Caribbean 767,1 31,4% Time Cost Sub-Saharan Africa 656,8 44% Time Cost South Asia 1001,6 29,6% Time Cost The data provided by the World Bank on this subject are very clear. The average worldwide time to resolve a contract dispute is between one and a half to three years6. And that is only for a first judgment; appeals can lengthen the total process. The legal cost can reach up to 50% of the amount at stake. Even in the most efficient group of countries, the average cost is over 20%. 4. Cfr. www.oecd.org See also: The World Bank: www.doingbusiness.org 5. World Bank. 2004. World Development Report 2005: A Better Investment Climate for Everyone. New York: Oxford University Press. 6. See www.doingbusiness.org © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 11 2. Background/Industry & Challenges Problems With Traditional solutions • Traditional Dispute Resolution (ADR): ADR mechanisms are designed to assist courts in resolving disputes in a timely, cost-effective and transparent way, reducing case backlogs and bottlenecks in the process. However, out of their two categories, mediators and arbitrators, the first does not offer an enforcement mechanism, rendering them ineffective in situations with inadequate faith. The latter, arbitrators, does provide enforcement mechanisms, but they are rather expensive and time consuming for medium contracts. • Third-party guarantee systems: Online or Offline Escrow Systems, Bank Letters of Credit: Entities entering into agreements that involve payments can deposit money with a third party who agrees to hold it and release it when certain conditions are met. These conditions are verified by third parties like Escrow.com, which is an example of an online escrow platform. However, these third-party services are expensive, rigid in their operational structure, and have centralized dispute resolution mechanism, making them inefficient under certain circumstances. • Platforms and marketplace: Professional online platforms and marketplaces such as www. freelancer.com or www.fiverr.com follow a review-based business environment, offering guarantees for the work done through their platform. These platforms operate through basic agreements between different parties. While reviews serve as a primary measure of evaluation for the chosen service provider, you are equally exposed to quality constraints nonetheless. Furthermore, these platforms charge a flat percentage fee for the entire project amount, making them rather expensive. Being a buyers’ market, sellers lose negotiating power to buyers, considering the buyer’s ability to give negative reviews. • Legal agreements: The system around legal agreements generates several direct and indirect costs for businesses. While litigation costs have a direct impact on companies’ ability to compete and prosper, it has multiple indirect costs stemming “from the uncertainty created by litigation, which may deter investment in high-cost jurisdictions.” Additionally, indirect costs can inflate companies’ borrowing cost while occupying additional management resources in the process.7 Some of the direct costs include legal fees, court taxes, administrative fees to arbitral chambers, and fees to arbitrators. Indirect costs, on the other hand, involve time and managerial resources that otherwise would have been used for primary business purposes. • Smart legal contracts: Self-executing decentralized smart contracts will revolutionize contract settlement for several kinds of transactions. Imagine, for instance, a smart contract that uses a locating sensor as an external oracle to know when to deliver payment from escrow to the seller when a package is delivered. However, despite their cost efficiency and trustless nature, creating smart legal contracts that can handle or measure complicated external factors, such as quality, isn’t feasible out of technical limitations and a gap between real-world circumstances and our ability to ingrain them correctly within the contract. How Jur revolutionizes the entire contract and dispute resolution industry The words ‘blockchain technology’ and ‘disruption’ are inseparable, considering the impact blockchain technology has had on businesses in a short span of time. Almost every single industry is utilizing blockchain technology in one way or another; be it financial institutions, transport 7. International Comparison of Litigation Costs (U.S. Camber Institute for legal Reform) available at www.instituteforlegalreform.com © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 12 2. Background/Industry & Challenges industry8, jewelry industry9, or anti-counterfeiting projects. Harvard Business Review and Amit Zavery (Senior Vice President of Oracle Cloud Platform) predict that among all the emerging technologies, blockchain will have the greatest impact on the economy. According to their research, the Blockchain will impact the nature of business relationships by making them more efficient and transparent, reaching, in 2027, a value of around 10% of world GDP10. With the projected value of businesses on the blockchain reaching trillions, demand for a reliable dispute resolution system for blockchain based agreements will be very strong. Blockchain technology can have an impact on the legal industry. The transparent structure and decentralized nature of the blockchain can play a crucial role in creating a legal framework for dispute resolution and smart contract creation. The Jur project will use the blockchain for: Notarizing agreements Escrowing contract money Automatically moving the money when parties agree the contract is complete, or in the case of a dispute, in accordance with the decision made by the Oracles Providing a voting system which produces fair results in a decentralized - non-falsifiable way using economic incentives written into the smart contract The resulting reliable, swift, cost-effective contract and dispute resolution system will generate outcomes for new distributed and international supply chains both at the micro (individual or firm level) and macro (economy) levels. For example, at the micro level: thee system will allow anyone to create a valid and bulletproof contract in minutes, and solve legal issues in hours, providing a fairer system, allowing big and small players to obtain equal treatment & detaching the results of dispute from the scale of resources owned. Meanwhile at the macro level, the system will allow the emergence of an more efficient economy with less transactional friction from mistrust, an increase in the internationalization of small businesses, an expansion of transaction security regardless of the amount transacted, reduction of red taping and thus, more fluid and competitive economies. Transparency The public nature of blockchain technology ensures that the decisions made by the Oracles follow a specific set of rules which can’t be modified by anyone and that any judgment rendered by Jur is public and notarized on the blockchain. 8. See www-03.ibm.com 9. newsroom.ibm.com 10. World Economic Forum: Deep Shift—Technology Tipping Points and Societal Impact - September 2015 © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 13 2. Background/Industry & Challenges Decentralization An agreement is really only an effective agreement when a third party (or Authority) can intervene and enforcement the agreement if necessary. Traditional systems have used centralized authorities which impose high costs. We can use the blockchain to create a decentralized system to provide a reliable dispute resolution using a voting system that harnesses the power of the crowd using economic incentives validated by game theory. The decentralized nature of blockchain technology results in a system that is robustly incorruptible. Some of the primary advantages that the decentralized blockchain offers when creating a legal framework are: • Corruption-proof notarization of agreements and immutable recording of agreements between two parties; • Flexibility to formulate specific terms and conditions that suit the nature of the business in question, without having to rely on a centralized legal framework and unnecessarily complex set of rules, las contracts under traditional legal framework must. • The centralized structure of traditional legal bodies makes them susceptible to corruption. Blockchain, on the other hand, comprises hundreds of thousands of nodes that are spread throughout multiple geographical locations, eliminating any possibility of effectively corrupting the network. • A decentralized legal dispute resolution framework allows any voting node to participate. An attempt to cheat system by voting tokens in bad faith for an unfair resolution can yield thousands of instances of individual counter votes placed by Oracles eager to win the reward of tokens forfeit in a futile quest for injustice. The power of the consensus of decentralized crowd, motivated by reliable economic incentives, makes attempts at corruption unappealing. Our game theory confirms this conclusion with detailed equations explaining outcomes and incentives for voters. • Under a traditional legal framework, central state authorities or federal bodies are responsible for creating rules and have the authority to change these regulations at any stage. Blockchain technology eliminates this unwanted uncertainty by prohibiting any intervention from state authorities or any central authority in the voting principles applicable within its framework. These principles are defined under the arbitration and escrow arbitration contracts designed at the beginning and cannot be changed later. It is important to note that the decisions reached through an arbitration clause within the contract will have legal relevance in many countries, and that’s where Jur’s Scientific Committee comes in. Having discussed in a general way how blockchain-powered decentralization can bring a revolutionary legal system to a world in urgent need, we will now delve into the details of how Jur works. Jur: A Consensus-Based Dispute Resolution Infrastructure Jur solves the problems of inefficient, costly, slow contract creation, dispute resolution, and enforcement. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 14 2. Background/Industry & Challenges Jur is a decentralized dispute resolution solution based on game theory and built on the blockchain. Jur uses a series of smart contracts to provide an incorruptible decentralized oracle that delivers fair and fast dispute resolution at near zero cost. The onchain architecture will be connected to various platforms. The base layer of JUR will connect the dispute resolution feature to a tool that allows users to create their own contracts and escrow funds for payment, agreeing via a smart contract to use the decentralized oracle if a dispute arises. The onchain architecture will also connect to a platform with contract creation features and contract marketplaces. Jur will even provide an API, allowing anyone to connect to the dispute resolution system on the base layer. The Jur dispute resolution system uses a simple incentive to motivate token holders to vote fairly and swiftly. Briefly, the voters who chose the majority side are rewarded with the tokens that are forfeited by voters who chose the minority side. Game theory shows that the only rational way to participate in voting is by attempting to choose the fair outcome. Game theory also indicates that Jur will remain resilient against various threats of corruption. We will discuss the details of how the system works and why it is robust below. There are two ways to access the dispute resolution system - open, and closed. Contracts may be Open, allowing anyone who holds Jur tokens to vote or they may use a Closed Hub, which provides service by vetting a subset of Jur token holders to ensure they are qualified to analyze a particular type of dispute. JUR is unique in offering users the flexibility to choose a completely decentralized oracle, create their own Hub of specialized oracles, or use a Hub that someone else has created. JUR is also unique in offering a base layer at zero cost11. The Jur architecture is based on two layers, an on-chain layer, and an off-chain layer. JUR PLATFORM Smart Legal Agreement Injector Smart Legal Agreement Builder Smart Legal Agreement Marketplace THIRD PARTIES Oracles Groups 2.0 Marketplace Voting Web Interface Third Party Smart Contracts BLOCKCHAIN SMART CONTRACTS Arbitration Arbitration & Escrow Contrac t Contrac t Hu b 11. More information about Oracles and their working principles is available in Appendix 1 under the Appendices section. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 15 2. Background/Industry & Challenges On-chain Layer: Multi-purpose Consensus-Based Dispute resolution We are creating a flexible Decentralized Dispute Resolution layer which can be used for thousands of different applications. Jur creates three types of smart contracts: Arbitration contract (AC) A smart contract that allows Oracles to vote to choose between two solutions proposed by two parties. The arbitration contract doesn’t require an escrow. The decision reached by the Oracles is communicated to the external element (smart contract or API). This contract can be opened by staking a certain number of tokens one one proposition to open the dispute. The staked tokens will be refunded to the party that opened the dispute if their proposition wins. This type of smart contract can be called by thirdparty smart contracts using our API or other platforms connected to JUR. Arbitration and escrow contract (A&EC) This type of smart contract is like the Arbitration Contract, but it requires an escrow of JUR tokens, or users may opt to pay a fee in JUR to use specific stable coins for the escrow. eliminating exchange rate risk. In case of dispute, the contract switches into “dispute state” and allows the Oracles to vote. The resolution chosen by the oracles is applied to the escrowed money, moving the money immediately. Hubs A Hub allows users to restrict voting to a selected group of Oracles. A Hub is created by one or more Admins that set some specific types of rules. An agreement does not have to be linked to a Hub, in which case anyone can vote in the event of a dispute. Parties may choose to connect their contract to a Hub if they want oracles with unique/ custom qualifications. Hubs can implement special rules to ensure incorruptibility despite having a smaller environment that would otherwise present a greater risk of whale attacks, for example. The Hubs have no fees, but Hub Admins may sell contracts to earn revenue12. 12. More information about the working principles and functions of Hubs is available in Appendix 2 under the Appendices section. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 16 2. Background/Industry & Challenges Off-chain Layer We are building a complete suite of tools to allow people to sign contracts, create contract templates, resell these templates, and build oracle groups and discussion boards, along with a friendly and complete interface to view all disputes and votes. Jur Platform Smart Legal Agreement Injector (SLAI) This basic tool for entering agreements will allow users to upload a generic contract easily, or buy a contract template from our contracts marketplace, or build a new contract using our Smart legal contracts builder and hash the contract and store the hash. Once the contract is chosen and signed, the two parties can hash the contract on the blockchain. Smart Legal Agreement Builder (SLAB) This tool allows users to create Smart Legal Templates (SLTs) that include wizards to guide users to fill in specific details. Users can develop interactive forms for specific industries and types of deals. Users can sell the contract template wizard systems that they create on the Jur Contracts Marketplace. Oracles and groups of Oracles can rate and comment on each contract template. Smart Legal Agreement Marketplace (SLAM) JUR marketplace is the place where contract creators can resell their SLTs and earn revenue. People in need of a contract can browse all SLTs by industry and topic, review comments and ratings, and check how many Oracles and groups of Oracles follow and suggest the use of that specific SLA. Oracles Groups (OG) This tool allows users to create communities and foster interaction and exchange of opinions. OGs help users find others with similar interests and create focused discussions. The OG function will provide discussions rooms, profiles, and other social platform features. Voting Web Interface (VWI) This tool is composed of a series of pages that communicate directly with the blockchain to allow oracles to vote and see results. The interface also reports all open disputes, allows oracles to filter disputes by industry and topic and provides chat rooms to discuss disputes. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 17 2. Background/Industry & Challenges APIs for third-party access 2.0 marketplace platform and blockchain smart contracts We will develop APIs that allow third-party companies to outsource disputes to our solution. The system will work with traditional 2.0 marketplace platform and blockchain smart contracts, which can connect through our API and inject disputes into our system. Companies must pay a monthly subscription to use the API. You can read more about this in the business model section. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 18 3. How Jur works JUR relies on the action of a decentralized community. To ensure this community delivers fair decisions, we have created a system of incentives that give stability to the system and generates a virtuous cycle. Example of Arbitration and Escrow Contract Let’s look at example of Jur in action. Broadly speaking, there are two kinds of participants in the system. • Contractual counterparties who enter into an A&EC Smart Contract; • Token holders who become oracles by voting in disputes that are opened. The A&EC (Arbitration & Escrow Contract) allows two parties to upload an agreement to be hashed. A hash of that agreement is stored in the A&EC so that the contents of the contract can be verified in the future. The parties deposit the sum of money specified in the agreement in the form of JUR tokens into the A&EC. The tokens are bound in the A&EC until the parties concur that their agreement has been fulfilled or until the community of Jur Oracles rules on a dispute initiated by one of the parties. In the absence of agreement, one of the two parties opens a dispute by proposing a resolution and staking a minimum percentage of the value of the contract. The other party has 24 hours to propose an alternative solution. The community of Oracles, everyone who holds Jur tokens, can vote for either proposal. At the end of the voting period (24 hours13), the smart contract executes the proposal that received the most votes by paying the money out. The Oracles have four possible choices available. 1 If an oracle does not believe they have a better than 50% chance of predicting the majority position, their best choice is to abstain from voting. Qualified voters will self select. Rational unqualified voters will abstain, and irrational ones will tend to lose their tokens if they foolishly choose to vote. 2 Confident voters can vote in favor of one of the two parties (each party proposes a resolution for the dispute). But they also have a third choice “Reject.” If they consider that the contract is clearly illegal or grossly unethical, they can vote “Reject” indicating they believe JUR should not rule on the dispute and should simply return the escrowed tokens to the parties that deposited them.14 13. The judgment Period of JUR MVP will be set in 24 hours. After some tests we may allow the Parties the freedom to establish their own preferred judgment period so that some agreements could have 48h or 72h for example as Judgment Periods. 14. Please refer to Appendix 1 for more information about Reject Vote. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 19 3. How Jur works 3 Each vote has to be higher than a minimum raise equal to the 1% of the total previously voted tokens. This prevents a battle of tiny votes indefinitely postponing the resolution. 4 The Oracles have a strong incentive to vote for justice provided by a straightforward system of economic incentives based on Game Theory: those voters who choose justice earn tokens at the expense of the unjust voters.15 Example: Alice and Bob We can explain the basic functioning of Jur with an example. Alice wants to get three articles from Bob for her new blog. Alice and Bob agree on details (deadline, remuneration, how the article should be done, etc.). This can be done regardless of where Bob and Alice reside. They load a hash of that agreement into a A&EC (Arbitration & Escrow Contract). Alice deposits 300 JUR that will go to Bob after he finishes the job into the smart contract. There are three possible results for the execution of the A&EC: • Agreement. Both parties agree to execute the contract as it was initially written. For instance, Bob delivers the articles on time, so Alice authorizes the A&EC to pay the 300 escrowed tokens to Bob, and the agreement is completed. • Friendly resolution. There is a dispute, but it is settled between the parties: Bob is only able to complete a single article due to unexpected commitments. Alice and Bob agree that Alice should only pay 100 JUR to Bob for his services. Alice and Bob authorize the A&EC to pay 100 tokens to Bob and refund 200 tokens to Alice. • Dispute. A dispute is resolved by JUR token holders (Oracles): Bob is only able to deliver a single article. Alice feels she has been harmed by Bob’s failure to deliver the other two articles and only want to pay 50 JUR tokens, but Bob wants to be paid 100. Since they cannot agree, Bob opens a dispute, staking 3 tokens on his proposal. Alice uploads her proposal to the A&EC. Then any Jur token holder can act as an Oracle and vote their tokens for either proposal. If Alice’s proposal gets the most votes, the A&EC will refund her 250 tokens and pay 50 to Bob. If Bob’s proposal gets the most votes, the A&EC will pay Bob 100 tokens and refund 200 to Alice. Either way, both parties pay nothing to the Oracles to have their dispute resolved - the incorrect Oracles pay the Oracles who vote sufficiently early with the majority. 15. The voting system is discussed in detail in Appendix 1 under Appendices section. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 20 3. How Jur works The Jur voting system allows anyone with Jur to vote for Alice or Bob. Everyone is free to vote as many Jur tokens as they wish. Voted tokens are deposited in smart contracts. At the end of the Period of Judgment (24hr is set as the initial standard) the proposal that receives the most voted tokens wins. Holders of tokens who voted for the minority side forfeit the tokens that they voted. Holders of tokens voted for the majority side are compensated with for their effort with the tokens of those who voted for the minority side, until those tokens are exhausted. Matching reward tokens are allocated only to those tokens that were voted soon enough to have been required to establish the minority.16 You can see how this works in the example below. Example Of Reward distribution In a dispute between Alice and Bob, the majority establishes that Alice is right. Each box represents a token that is voted. The lower tokens are the ones that were voted first. The distribution of winnings is as follows: 0,1 • The 5.1 green tokens win the 5 yellow. Each green token is then rewarded with approximately 0.98% tokens; • The blue tokens do not win anything because they are not needed to establish the majority. Most disputes will probably not involve a reject vote, so this simple scenario represents most cases. Here, we have assumed that the minimum vote is 1 token for the sake of simplicity. This explanation is a simplification; you’ll find more information in Appendix 1. Forfait – To be paid to mayority Returned with matching reward Returned with no reward 16 For simplicity sake we do not consider the very small cost in GAS on Ethereum, as long as that blockchain will be used. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 21 4. Use Cases for Jur Here are just a few examples of possible use areas for JUR smart legal agreements. OTC transaction Guarantees The base layer of Jur is ideal for smart legal agreements that are clear and simple. Crypto-value transactions are an ideal use case. Jur can be used to elimate the counterparty risk (crypto vs crypto or crypto vs fiat) and guarantee a fair transaction17. Intangible services: one to one Consulting Service Technical Graphics Software development Document Processing Graphic Design Data Entry Design development 17. An elaborate example of OTC transaction is listed in Appendix 6. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 22 4. Use Cases for Jur Crypto-related and ICO service Contracts We believe that service contracts in the crypto/ICO fields are likely to be among the first use cases for Jur because during the first phase, people accustomed to cryptocurrency exchange rate risk will be more willing to adopt Jur. For instance, the marketing contract for an ICO could be created on Jur, since such contracts are frequently paid in ETH or BTC. In general, any parties that are already using cryptocurrency are likely users. ICO Investment contracts Money escrowed Timeline Website launch Money in escrow Private sale investors may enter into an A&EC with ICO issuers with a different expiration for each investment round when certain milestones are reached. Agreements of this type are already standard in the market (you decide the total amount of the sale, but the amounts are unlocked with time as the project goes on) setting high penalties for both counterparties in the event of a default by either one of the two. The speed and impartiality with which the eventual dispute would be resolved would shorten the negotiation times considerably (which would be spent to a large extent to define the milestones) and would give reliable guarantees to both contractual counterparties. Ensure transfers of registered mobile goods (e.g., Cars, Boats) The system could be used not for the full payment of the motor vehicle but a percentage as a deposit. In this way, the parties will proceed with the purchase in fiat currency but will set a hypothetical 20% as buyer-side deposit. Or, they can establish that the seller also will pay 10% in the smart contract to guarantee the sale at a predetermined time. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 23 4. Use Cases for Jur Guarantee real estate transfers: deposits In the short term, users may not wish to guarantee full purchase price transfers. It is more likely that some will use the system for good faith deposits. Real estate agents could suggest JUR contracts in order to secure a certain sale under specific terms. The tool is extremely flexible. It could be used for the buyer’s down payment or a sum representing the seller’s guarantee of availability for sale. The tool may be particularly useful in countries where the sale process is fraught with peril and uncertainty. Ensure sales of web domains, with no intermediate platforms and related fees Jur could be used to swap web domains securely between individuals. A specific client could be developed that makes the process easier. In the meantime, the parties could insert a certain web domain into the hash as an agreement along with its price and indicate that the subject will become the owner of the same in a given time span, which can be seen on a specific site (which preferably also shows the transfer history). Guarantee the purchase of intellectual property Provide, with client specifications, the transfer of intellectual property when filed with Public Registers viewable by anyone. In this case, it is necessary to consider the technical time header notation of a trademark, patent, design or a software application. For each jurisdiction, there will be a reasonable minimum and maximum wait time for the transfer. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 24 5. Jur Ecosystem The global legal industry represents a multi-billion dollar market that is still being served by the traditional litigation infrastructure. Jur takes the conventional legal framework and transforms it into a digital legal framework utilizing the blockchain technology. This innovation will be helpful to several types of players that will participate in this new ecosystem. At the same time, these players will contribute to the health and development of the system. As a decentralized project, Jur is user-powered. Some players in the tech and legal fields will also contribute to the system without directly using it. • Platform users: From small or mid-level enterprises to global businesses with many small transactions, third-party sites, entrepreneurs, proprietors, and contractors along with anyone using Jur’s platform and APIs for creating smart legal agreements or dispute resolution. • Professional community: Some legal disputes require expert evaluation. Jur has introduced the concept of Hubs which comprise professionals from different fields including lawyers, technology professionals, real estate professionals, trade experts, and other professions. The platform users can access hubs when they require expert knowledge for dispute resolution. • Jur’s community of voluntary oracles: Jur’s community comprises regular platform users and professionals. Our community allows Jur to function as a decentralized dispute resolution platform. The community members receive rewards for participating in different cases. • Technology partners: Jur uses a combination of sophisticated technologies to power its platform. In order to provide uninterrupted services and continually upgrade the service quality, Jur works with different technology firms, security experts, and blockchain developers. • Legal partners: To create a global digital litigation framework, it’s important to understand the regulations of different countries, and that’s where our legal partners come into the picture. Jur is partnering with top legal firms around the world, ensuring that our solution remains valid and competent under different jurisdictions. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 25 6. Business Model While JUR’s token reserve will provide an ample base for development of the JUR ecosystem, we have also designed an operating model that will generate revenue to support operations, maintenance, and development of the system. The base layer will be open source and free to use, but we will also offer several paid services. We can divide these paid services into four categories: business to business, business to consumer, marketplace, and financial services. Business to Business Our initial market research interviewing business owners, particularly businesses that offer service marketplaces, indicates that there is a great need for a dispute resolution system. Small and medium-sized businesses can’t afford to create bespoke solutions and existing “solutions” are inadequate. Even large enterprises like Upwork Freelancer and Paypal’s dispute resolution systems involve high cost and litigation risk. These businesses could significantly cut costs by using our decentralized oracle to resolve some or all of their disputes. We will build APIs to allow businesses to connect and send disputes to our system. We will charge subscription fees based on the number of disputes referred per month. Business to Consumer Our basic product allows users to register a contract using a hash, deposit money into escrow, modify the contract payout if desired, and then either pay the agreed amount or enter into a dispute. This will incorporate the features of a platform like Everysign, but with the additional powerful features of the escrow and dispute resolution system. This product will be available for free users to enter into up to three contracts per month. Using a freemium model to attract users, we will introduce tiered “professional” pricing for users who wish to enter into more than three contracts per month. Providing a user enters into less than four contracts per month, they can use the Jur base layer for free. (Processing nodes will charge minimal gas fees.) Marketplace Jur dispute resolution, like any other form of dispute resolution, relies on clear contracts to deliver predictable fair outcomes. Jur team will create a tool to allow users to build an ecosystem of interactive wizards to guide users in creating clear agreements. We call this tool the Smart Legal Agreement Builder or SLAB. It is a meta-builder - the SLAB lets users build Smart Legal Agreement Templates (SLTs), which in turn guide end users to fill in the details of their deal and select options to create their own individual Smart Legal Agreements (SLAs). Users who create SLTs can sell SLAs in our Smart Legal Agreements Marketplace (SLAM), earning income for their work. The platform will allow users to comment on and rate SLATs, guiding users to the best products and helping ensure the optimum functioning of the system. Through the SLAM, Jur will charge a fee of 2% to 5% on each contract sale to offset the cost of creating and maintaining the SLAB and the SLAM. Financial service Jur will accept selected stable coins as escrow payment using a standardized smart contract. The smart contract will require a fee for using stable coins instead of Jur. The fee must be paid in Jur. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 26 6. Business Model Business Benefits of Jur With Jur Onchain layer, anyone will be able to • Get a free decentralized dispute resolution system: for third party platforms that want to add a dispute resolution layer at 0 cost for their customers • Build App enforced on the blockchain: developers, lawyers or Companies could build up their own Apps for specific sectors; • Get a decentralized Oracle for your smart contract: back up smart contracts with JUR for cases where the smart contract algorithm cannot deliver a good ruling (tampering, technical failure, or Act of God, for instance; • Create your own Judging Hub for complex contracts: create a Hub and create requirements for voting i the hub (for instance, professional certification, or selection by a trusted centralized authority that administers the Hub). Hub creators can also indicate guidelines for writing and ruling on contracts and disputes. These hubs will be needed for specialized markets where participants need a system where participants need a system where only experts are allowed to vote on disputes and where a clear consensus on the best way to interpret complex matters is provided With Jur Platform, anyone will be able to • Create and use feature-packed Smart Legal Agreements: quickly create smart legal agreements on the blockchain using ready made templates & wizards, escrow money, and make payment or file a dispute and get justice in 24 hours, all for almost free; • Develop and sell Smart Legal Agreement Creation Wizards: Anyone (lawyers, developers, designers etc…) can create a Smart Agreement template and a wizard to guide users to complete it. Templates can be attached to a Hub, incorporating guidelines for ruling on disputes. Organization/Governance Model The management team of Jur will be responsible for decisions concerning infrastructure development, technology upgrades, and any major modifications in its operating principles. Any potential changes to the Jur Platform, the Hubs and the rules of the voting system will be discussed with the Community. The team will focus on building an infrastructure. The community will be free to build their Smart Legal Agreements, Hubs, set of rules. The intervention of the Jur Team will only be as a guarantor of the efficiency and independence of the project. Alessandro Palombo, CEO of Jur, will be the public face for the company and will be responsible for its daily operations. Alessandro is an expert in legal technology and fintech. Jur will operate through partners for addressing legal issues in different jurisdictions. Giotto de Filippi, Co-Founder, is an expert in blockchain sphere, and an advisor for more than ten © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 27 6. Business Model ICOs. He will be responsible for creating the tokenomics and financial model for Jur. Filippo Schiano di Pepe, Co-founder, is an expert in marketplaces, having already created a architectural marketplace with 75,00 users based in Silicon Valley, funded by Draper and 500startups. He will lead Jur’s business development. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 28 7. Technology Blockchain Blockchain technology forms the technological base of Jur’s entire ecosystem. Considering the widespread use of Ethereum blockchain, its active community, and support for smart contracts, it is the most suitable choice for Jur at the moment. Our technology team is well aware of the current challenges with the Ethereum blockchain, especially with its current transaction rate (15 transactions per second). When there is a high demand for network utilization, viable gas prices often rise (as seen during the CryptoKitties launch). High gas prices can make the cost of transacting online (e.g., voting on arbitrations, or creating new arbitrations) prohibitively expensive. While there is a roadmap to improve scalability in Ethereum including layer 1 and layer 2 solutions (specifically Casper / proof-of-stake, sharding, plasma), there are also alternative efforts to solve the scalability problem underway. Jur will consider all solutions. Ethereum It is possible to reduce on-chain transactions either via a “side-chain” using something like the Loom networks approach whereby most transactions occur off-chain within a proof of authority side-chain, with the main chain being used to secure the side-chain at well-defined checkpoints or by using state channels (e.g., Raiden) to facilitate peer-to-peer micro-payments. Both of these have advantages in terms of reducing on-chain transactions but come with a cost of additional complexity. Both approaches are also relatively novel and have not yet been used in large-scale production applications. We will continue to watch as solutions develop. EOS EOS’s mainnet is due to launch imminently. EOS promises high rates of tps and a different approach to accounting for transaction costs (aka gas fees in Ethereum). Gas mechanics differ from Ethereum and Cardano where ETH or ADA is used to pay directly for transaction costs, but in case of EOS, by holding their tokens you are entitled to use a proportional amount of network bandwidth. Scaling is solved through dPoS, a more efficient, but less decentralized approach to consensus. Fast finalization and low cost of transactions may make EOS an attractive option for dApps which rely on incentivizing users to make on-chain transactions (such as voting in the JUR system). Cardano Cardano focuses on a research-driven approach, solving scalability through splitting the settlement from computation and putting an emphasis on interoperability between blockchains. At the moment, there is a mainnet based on a centralized block production approach. Cardano project has a release scheduled for the introduction of the Ouroboros consensus algorithm (proof of stake) which would decentralize network security with the deployment of the computation layer. Migrating to Cardano offers one crucial benefit; Smart Contracts written in Solidity should be deployable in Cardano (which is also developing its own native language), and the emphasis © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 29 7. Technology on blockchain interoperability may facilitate a smoother switch from Ethereum via atomic token swaps or similar mechanisms. Jur strategy Today, Ethereum is the clear choice for any dApp MVP. It has mature tooling, an active development community and a large base of potential users. Desktop wallet options such as MetaMask and mobile options such as Cipher, Trust & Status-IM give users relatively easy UX’s to interact with dApps. However, because it will eventually be necessary to scale, we will need analyze the features offered by other blockchains at comparatively lower costs, with very similar benefits in respect to decentralization and transfer of value. Technical Support Jur will maintain a technical support team to ensure the smooth and uninterrupted functioning of its platform. In order to facilitate easier adoption, Jur will create a series of videos, usage guides, and forums, addressing all the questions of our platform users. Jur will offer ticket support to its users, with a guaranteed response under 72 hours. Coin / Token Economy Token Specifications Jur is a utility token that not only provides access to blockchain dependent services, but also a means of payment. Under Swiss law, Jur should be classified as a hybrid utility token, allowing a well-regulated ICO providing Jur demonstrates a minimum viable product. Technology: Ethereum (ERC20 Standards) Total Supply: 1B Tokens Token Supply for Public ICO: 400 Million Token Symbol: JUR Use Cases of Jur Token Jur tokens will be used for: • Means of payment/collateral guarantee on other payments: JUR tokens can be used to escrow funds for the Jur contract and dispute resolution system. JUR can also be used to pay for third party services (eg. freelancer platform) on JUR. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 30 7. Technology • Utility Token for Voting: JUR is the only token individuals can use to vote on disputes in the JUR system. • Means of payment for Jur Platform services: Jur token will be used to pay fees for using special features on the platform and its Hubs. Token Sale Jur is currently in Private Sale. The specifications about the token sale will be released to the public before its public sale event. Token Distribution Angels 6% Seed 10% Team, advisors 24% Adoption Drop 5% Company Reserve 15% Public Sales 40% Jur team has closed an Angel investment round and has used some of the funds to create and test an Alpha version of the voting system. Jur then closed a second Private Sale Seed investment round which is being used to develop the JUR MVP which will be released in 2018. The adoption drop of 5% will be used to ensure a sufficient number of both contract users and oracle voters to produce a network effect and achieve the critical mass needed for optimal functioning. The Company Reserve allocation of 15% of tokens will be used for further development. The team tokens are locked for 20 months with weekly releases, and the Advisor tokens are locked for 12 months with weekly releases. During the ICO we will sell 400M Jur tokens of the 1B issued. That is a fixed amount - no more tokens will be issued. Unsold Jur tokens will be allocated to the Company’s reserve, and 50% of these tokens will be made available after 12 months post the ICO whereas the remaining 24% will be available 24 months after the completion of the ICO. The hard cap will be CHF30M. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 31 Fund Distribution Marketing 22% Legal 5% Operation 15% Tech 35% Biz dev 23% Jur will spend a significant part of the funds over the next five years for tech development, business development, and marketing. We will focus on building a community of voters and users. We will also engage in partnerships to sell the Jur dispute resolution platform to existing marketplaces (i.e. freelancer platforms like upwork or fiverr) on a yearly subscription basis. The marketing and business development strategy will focus on the USA, EU and South-East Asia market in the first three years and then expand globally. The business plan, which will be confirmed after the ICO, will seek to reach profitability by the fourth year. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 32 8. Marketing Target Market Medium-Sized Enterprises A recent study18 indicates that the US companies spend roughly 0.4% of their revenue on legal services whereas companies in Canada and the UK spend 0.26% and 0.24%, respectively. For medium-sized enterprises, the cost of legal services could make a significant difference in their bottom line. Jur allows these companies to create smart legal agreements at near zero cost along with an option to settle a dispute for free with its basic voting system. It could not only mean significant cost savings for medium-sized enterprises, but it will additionally allow these companies to settle their dispute in a time-efficient manner. The default voting period for a dispute is 24 hours, which can be increased or modified depending on the involved parties. With Jur, these businesses will enter a new dimension of creating meaningful/risk-averse business relationships. Professionals and Proprietors Professionals, as well as proprietors around the world, work with people from different backgrounds, exposing them to litigation risks. With Jur, they can create smart legal agreements using marketplace templates or create custom templates that suit their terms. Additionally, they can use Jur’s dispute resolution system to save financial resources otherwise spent on legal fees. Big Digital Enterprises The technology firms top the list of legal spenders among different industries. Instead of operating with an expensive traditional legal framework, these digital enterprises could benefit by utilizing Jur’s dispute resolution infrastructure. Jur offers APIs for different layers/functions of its platform, allowing these enterprises to outsource their legal disputes to our community. The disputes are settled quickly and in a cost-efficient manner. Competitive Landscape • Mattereum: Mattereum comes with a digital legal framework that aims to connect goods and services in the physical world with their digital counterpart through legally enforceable smart contracts. Their core operational structure involves a smart contract on the blockchain and an arbitration-based dispute handling through competent, independent arbitrators. However, it is important to consider that the involvement of an independent arbitrator will incur legal fees, and at the same time, lengthen the entire dispute resolution period. • Agrello: Agrello is another player offering an interactive graphical interface that allows ordinary users to create legally binding smart contracts using natural legal language, which is later converted to a smart contract. Smart contracts handle payments and other actions automatically in accordance with the terms input by the involved parties. A parallel legally 18. http://www.acritas.com/ © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 33 8. Marketing binding document is created along with the smart legal contract. Despite using blockchain technology to handle a sizeable portion of the task, Agrello depends on traditional courts to resolve any legal issues, making it somewhat expensive as well as time-consuming to receive justice. • Jury Online: Jury Online is a platform that specializes in ICO governance, allowing funds invested in a project to be held in an escrow within a smart contract, and a milestone payment is released when both the parties agree with the outcome. In case of a legal dispute, either party can turn to arbiters - experts from the fintech law IT and blockchain industry for an impartial conformity assessment of the realization and implementation of the project’s roadmap. • Kleros: Kleros, unlike the other projects, represents a third-party dispute resolution system, which doesn’t have formal legal standing but, like Jur, is powered by a community that has an economic incentive to choose the best/right outcome. Users can create smart contracts with external systems and use Kleros for their adjudication protocol. Kleros has a different voting system which imposes costs for the parties to the dispute. Kleros tokens can’t be used as a payment/escrow token. Kleros is only as a dispute resolution system for smart contracts. It does not offer features for drafting Smart Legal Agreements. Go To Market Strategy Jur’s go-to-market strategy is to focus on the crypto market in its initial phase, starting with Smart Legal Agreements related to the crypto-industry itself. Today, the crypto and ICO market requires many agreements between people that must be closed quickly and safely. Jur is the perfect solution to guarantee: • OTC transactions: Jur will be an extremely cheap solution for guaranteeing OTC transactions in a safe way, at costs close to 0; • ICO services (marketing, whitepaper review, smart contract development etc..): everyone knows about the services an ICO needs before the final launch. Jur is the perfect solution for establishing trust on irrespective of the size of the contracts, especially when the parties don’t know each other; • ICO investments: in case of investments in projects that are still under incorporation or legal assessment phase. Jur is the perfect solution to allow investments subject to the company incorporation or other events. In B2B marketing, Jur will build partnerships with existing service Marketplaces to provide dispute resolution services to their users, at the same time providing a steady stream of disputes for oracles to examine. In B2C marketing, Jur will reach out to freelancers and professionals and offer them a cost-effective way to ensure they are paid fairly for their services.. Jur will use two approaches to create a community of Oracles and first community of earlyadopter users, our Blockchain Legal Tech Alliance and an Adoption Drop. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 34 8. Marketing Blockchain Legal Tech Alliance Jur is building relationships with groups and individuals who are experts in the expanding frontiers of technology and the law. Our diverse community of experts will guide the development of the system, establish the first hubs, create best practices for making new Hubs, and helping their clients use Jur and recommend the system to others. This Alliance will organize meetups and events for spreading the potentiality of Jur and, in the future, will become a non profit Association, backed by Jur and led by well-known international expert in the legal technology field. The Alliance will cover nearly 40 and more Countries in its initial months Adoption Drop To ensure that Jur starts out with enough participating Oracles to deliver reliable dispute resolution and oracles enough contract users with disputes to rule on, Jur will identify enthusiastic potential early adopters and simply give them tokens to reward them for pioneering the use of the system. Some of these will be members of the Jur legal alliance. Others will be paired digital service vendors and their buyers who agree to use Jur for their contracts. WIth five percent of JUR tokens reserved for adoption drop, JUR will provide sufficient volume and liquidity for the system to work from inception. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 35 9. KYC Jur will conduct the ICO in full compliance with Swiss Anti-Money Laundering Regulations. This objective will be reached through the support of well renowned outsourcers and consultants as follows: • Lexpert Partners AG will act as external independent Compliance Officer and Money Laundering Reporting Officer and will perform the compliance check including PEP and Wallet Risk; • Intrum (with IDNow) will offer the real-time video-identification service according to the FINMA Circular 2016/7 (Know-Your-Customer compliance). Finally, Jur has applied to be member of VQF SRO, the leading, largest, officially recognised selfregulatory organisation pursuant to the Swiss Federal Act of 10 October 1997 on the combating of money laundering and the prevention of the financing of terrorism in the financial sector. Jur will practice maximum security measures to secure personal details of registered users. All the information stored on our platform will be encrypted, safeguarding their personal information against any hacking attacks or information leaks. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 36 10. Roadmap Q3 2017 Idea Conception Q1 2018 Seed round, Patent Q3 2018 New Website Whitepaper v.2 Technical Paper Hire business development for Asia and South East Asia Q1 2019 Voting Web Interface Arbitration Contract Smart Legal Agreement Injector Q3 2019 APIs to Third Parties Tests on Hub Voting Build up Oracle Community Marketing and business development for freelancers acquisitions Q1 2020 Blockchain Switch* Build up a multilingual customer support Team Hiring experienced community managers to grow and strengthen the community © 2017-18 Jur® IS A REGISTERED TRADEMARK. Q4 2017 Whitepaper 1.0 and focus groups, early investments and private Alfa Version, Company Incorporation, Team building Q2 2018 Whitepaper v.1.0 Temporary Website Blockchain Alliance Q4 2018 MVP release ICO Tests on Open Voting System Q2 2019 Smart Legal Agreement Builder Oracles Groups Hubs Early adopters in Cryptocommunity (OTC transactions, investments etc…) Q4 2019 Mobile Version Integration with Stable Coin Continue marketing operations Marketing and business development in Asia begins Q2 2020 Jur Platform Advanced version Advanced Smart Legal Agreement Builder Community operations *This choice will depend on tech and marketing evolution on the next months JUR.IO 37 11.Team Core Team Alessandro Palombo Ph.D., CEO and cofounder Alessandro is an expert in legal technology and qualified Lawyer. In 2013 he became the youngest lawyer permitted to practice in Italy. Alessandro has a Ph.D. in Administrative Law and a Master’s Degree in Global Regulation of Markets. Alessandro also previously founded a legal tech company and brought that experience and knowledge in contract automation to Jur. He founded a Community on Legal Technology associated with Legal Hackers Turin Chapter and hosted a show called Legal Tech Radio. He worked as an advisor or cofounder for many other companies in different areas, bringing strategic and legal competencies and adapting to the business needs, successfully selling his shares after the ramp-up phase. Giotto De Filippi, cofounder Giotto has advised many ICOs and blockchain projects, including Cardstack, Decentraland, RNDR and others. He is well respected in the blockchain space as an expert on tokenomics. He has a background in marketing, and was Director of Marketing at Viagogo and Skype. Jur is the only project he has cofounded. Giotto is focused on working on the model of voting system and on the marketing plan on a daily basis, bringing his experience in the blockchain space and company management. Filippo Schiano Di Pepe, cofounder After receiving his architectural qualifications in Italy and working a few years of working in an International environment, including Massimiliano Fuksas’ studio in Rome, Ray Hole Architects in London and others, Filippo launched a web startup. Gopillar is a crowdsourcing platform for interior design and architecture. Gopillar has been funded by 500 Startups and Draper Associates in Silicon Valley. Filippo has wide experience in professional marketplace business development, having built a community of 75,000 architects. He brings competence on product and business development in marketplace with him to Jur. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 38 11.Team Federico Schiano Di Pepe Federico cofounded Cocontest, now Gopillar, is a Forbes30under30 Europe entrepreneur and YEC member, one of the elite entrepeneur organization. He made experience in marketing a professional marketplace, obtaining successful results. Gopillar has been founded 2.7M. He brings in Jur knowledge on marketing and project managing of a marketplace platform and best network connections all around the world. Luca Yesupatham Daniel, CTO Luca has been involved as CTO in the legal tech field, founded a Digital Agency based in Bangalore. He deals with blockchain space since 2015, being investor in the area. He is advisor on Blockchain India and has a deep overview on the development. Previously Luca cooperated with many startup in the fintech and legaltech area. Ivan Granito Ph.D., CFO Ivan is a hybrid profile between quantitative economist, actuary and startupper with focus on cryptoeconomy. Further than Jur, he is currently involved as Consultant at Boston Consulting Group Milano fully qualified Actuary. Ivan founded a startup in the online holidays accomodation, acquiring experience in lean financial modeling. He holds a Ph.D. in Actuarial Sciences at Sapienza University of Rome. In the blockchain space he advised several blockchain project with regard to cryptoeconomics of the token. Raffaele Battaglini LL.M., CLO Raffaele is an attorney, qualified to practice law in Italy, founder of Battaglini-De Sabato Law Firm. He offers legal advice to SMEs and start-ups in the realms of innovation, internationalisation, M&A deals, corporate matters and contracts. Regarding innovation, Raffaele is particularly active in the digital field, digital transformation phase and blockchain applications. He is a co-organizer of ‘Legal Hackers Torino’; the first-born Italian chapter of the global movement, ‘Legal Hackers’, which explores and develops creative solutions to some of the most pressing issues at the intersection of law and technology. Adam Dossa, Blockchain Architect Adam is a blockchain developer who previously worked with blockchain organizations including Polymath, Aragon, Spectre.io and many others. Adam graduated from Oxford University with a math degree, and worked for Morgan Stanley for a few years, becoming Executive Director of Interest Rate Derivative Risk, Downstream Reporting, P&L and Attribution. Adam founded his own project, Enclaves, a DEX and is working with Jur on the development and the Architecture. Luca Viviani, Community Luca has been involved in the crypto space since the beginnings. With a developer background he founded CryptoItalia, the largest Fb group on crypto in Italy. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 39 11.Team Advisors Jur has set up an Advisory Board who helps Jur to correctly move in the blockchain space, selecting people with different expertise on the blockchain and Fintech space. Ariel Mielich Ari Meilich is a Project Lead at Decentraland, a decentralized virtual world that is becoming a playground for all NFT games. He was previously an Analyst at Charles River Ventures, and founded two startups. He’s a member of the Voltaire House, the foremost crypto community in Buenos Aires.He brings in Jur the experience of a blockchain project, token management, ICO infrastructure and community building. David Orban Founder and Managing Partner of Network Society Ventures, David Orban’s entrepreneurial accomplishments span several companies founded and grown over more than twenty years. An early adopter of blockchain technologies since 2010, he was the first to own Ether during the Ethereum launch. He also led the adoption of Bitcoin and blockchain in start-ups and is an advisor and investor in numerous blockchain companies and funds. He brings in Jur the experience in blockchain digital product development, Investor relationships Enrico Ferro Enrico is the Head of the Innovation Development department at ISMB, a private institution conducting international research and innovation projects. He is also a member of the Italian Node’s Strategic Committee of EIT Digital, an organization which works to encourage innovation and market development across Europe. Finally, Enrico invests in technology-based startups and covers an advisory role in a selected number of blockchain ventures such as Swissborg and Bitclave. He brings in Jur his experience in the field of Innovation Management. Also he helps with the Strategic support Institutional Relationships. Matt Briant Matt joined the Walt Disney Company in 2014 to lead Digital Transformation and develop an Internal Digital Agency for Southeast Asia. His focus is on developing CRM & Retargeting Programs, 1st Party Data Management, Mobile & Social Marketing, Influencer Marketing, Local Content Production, eCommerce and Consumer Experience Architecture for Sites & Apps. Matt brings in Jur his experience in marketing of digital product and relationships. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 40 11.Team Scientific Committee In addition to our Advisory Board, Jur has set up a Scientific Committee for working on the relationships between legal world and the blockchain. This group is made of Academics in Legal and Economics areas who already started to studying topics such as smart legal contracts, smart contract, effectivity of the blockchain in the legal world. The Scientific Committee will be a third party Scientific Body of Jur project that brings studies on the matter of legal and game theory and blockchain supporting the development of Jur Project. Prof. Michel Cannarsa, Director of Law Faculty of Catholic University of Lyon Dr. Michel Cannarsa is Dean of Lyon Catholic University Law School. He received his PhD, dedicated to Comparative Products Liability, from the University of Lyon and the University of Turin in 2003. His areas of research are International and European Law, Commercial Law, Comparative Law, Consumer Law, Law of Obligations and Legal Translation. He has recent books and articles on Contract and Products Liability Law. For the past two years, has has been involved in numerous academic projects in the field of Digital Law and Personal Data Protection. Dr. Mateja Durovic, King’s College London Dr. Mateja Durovic is a Lecturer in Contract and Commercial Law, having joined the Dickson Poon School of Law in July 2017. Previous to this, he was an Assistant Professor -) at the School of Law, City University of Hong Kong. Dr. Mateja Durovic holds a PhD and LLM degrees from the European University Institute, Florence, Italy, LLM degree from the University of Cambridge, UK, and LLB degree from the University of Belgrade, Serbia, where he graduated as the first and best student of his class. Dr. Durovic was a Post-doc Research Associate at the European University Institute -), Visiting Scholar at Stanford Law School, USA (2011), and at the Max Planck Institute of Private International and Comparative Law, Hamburg, Germany (2010). Dr. Durovic worked for the Legal Service of the European Commission, as well as a consultant for the European Commission, BEUC (European Consumer Organisation) and the United Nations. He speaks fluently Serbian, English, French and Italian and basic Spanish and Greek. The work of Dr. Durovic was published in leading law journals (European Review of Private Law, European Review of Contract Law, Journal of Consumer Policy) and by most prominent publishers (Oxford University Press, Hart Publishing).​ Prof. André Janssen, University of Muncher- University of Hong Kong André Janssen is a Chair Professor at Radboud University Nijmegen. He has previously held a position as visiting associate professor at the City University Hong Kong as well as positions at the Universities of Bayreuth, Göttingen, and Mü§nster in Germany. He studied at the University of Münster and at the University of Nijmegen and he got his Ph.D. from the University of Münster (summa cum laude). Furthermore he was (with the support of the European Commission) a visiting scholar at the Universities of Nijmegen, Oxford and Turin and gave guest lectures in more than ten different countries. He published more than 100 © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 41 11.Team books and articles in the field of Private, European and Comparative Law. One of his main research areas are International Sales Law and Comparative Law. His latest book on these topics is the volume International Sales Law: Contract, Principles & Practice (edited together with DiMatteo, Magnus and Schulze, publisher: C.H. Beck, Hart and Nomos 2016). His German “Habilitation” with the title “Präventive Gewinnabschöpfung” (“Preventive disgorgement of profits”) has been published in 2017 in the series “Ius Privatum” (Mohr Siebeck) and was awarded the Marie Curie Award in 2015 by the European Commission. He is the chief-editor of the European Review of Private Law (ERPL) and the head of the German redaction committee of the Italian law journal Contratto e impresa / Europa. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 42 SMART LEGAL AGREEMENTS • CONSENSUS BASED DISPUTE RESOLUTION • ESCROW DEPOSIT AND DIRECT PAYMENT OF SETTLEMENTS • DECENTRALIZED LEGAL SYSTEM JU R Jur creates secure economic connections between individuals and businesses using the blockchain. JUR is the new decentralized legal system that creates trust between parties in the global economy Jur A.G. Grabenstrasse 25 Baar - Zug (Switzerland) CHE‑--www.jur.io Updated on July 2nd 2018 Appendix 1 - How the Oracles votes Jur provides two different models of voting, open votes or closed Hub votes. Users can choose to enter their contracts in the open dispute resolution or any closed Hub in the Jur ecosystem. In the beginning, closed Hubs with selected experts will probably be more reliable sources for fair dispute resolution for highly technical contracts. We believe that the completely decentralized model will eventually be the most reliable when the members of user community become sophisticated about when to vote and when to abstain. Open Vote - Self-selection of Oracles Any voter can choose to participate. Although there is no centralized barrier to entry, poorlyqualified voters will tend to avoid voting. A rational voter will only choose to vote when they are more than 50% confident that they can predict the majority position. Thus the system discourages participation by voters who lack the expertise required to rule fairly on a particular dispute. Only experts have an incentive to vote on disputes that require expertise to correctly assess the fair outcome. Vetted Oracles - Closed Hubs Only certain voters are allowed to vote. Admins can establish Hubs with requirements that Oracles must meet in order to vote, creating an ecosystem in which Hubs with vetted oracles are in competition to provide the best service. Hubs do not charge fees directly. Hub administrators earn revenue by selling the contracts that are used on the Hub. Universal principles of the voting system The vote count is visible Our game theory assumes that the Oracles can see how many tokens are staked on both propositions. One might be concerned that voters will only want to vote with the majority, but that is clearly not the case. Because a token voted on the current majority side will be, by definition, without a match on the minority side, voting with a majority that has already been established will only provide a reward if someone else chooses to vote for the minority, but the end result does not change. When you vote on the minority side, you know for certain that if the final result is in your favor, someone has already committed a token that they will forfeit to create your reward. In addition, JUR limits majority side votes to 200% of minority side votes, so the spread will not be too large to overcome. Majority tokens are matched with minority tokens in chronological order The votes on both sides are stacked in chronological order. Tokens voted for the minority proposition are forfeit. Tokens voted for the majority side are matched with forfeit tokens until the forfeit tokens run out. Thus, if you vote early enough that your vote was required to create the majority, you are rewarded, but if you vote after the majority is permanently established, your tokens are simply refunded without reward. Thus there is a powerful incentive to vote swiftly. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 44 Appendix 1 - How the Oracles votes The minimum vote is 1% of the current total vote We extend the voting period if there is a large volume of votes or a change in the result at the last minute. To keep a close contest from extending indefinitely with tiny voting increments, we require a minimum vote of 1% of the current total. Both parties in the dispute propose a solution Both parties must propose a resolution. Knowing that an impartial group of oracles will be selecting the resolution that they believe is most fair, rational parties will be careful to make reasonable suggestions. Parties can certainly propose unfair resolutions, but they do so at their own clear peril. When the two parties are negotiating with each other privately in direct conflict, their proposed resolutions may tend to diverge as a result of positional bargaining. When the parties must submit their proposals for impartial consideration, their solutions will tend to converge, drawing closer to a fair solution in the center as each party strives to appear to be the most reasonable. Only JUR tokens can be used to vote We will only allow Jur tokens to be used for voting. This will ensure a robust demand for our utility token and enhance the value of the token reserves that we hold to support Jur development. No fees There is no fee to use the basic voting system to resolve disputes or to vote. Additional votes for the majority side are not allowed when the majority reaches 200% of the minority This prevents whales from putting up a massive vote wall at the beginning of a dispute in an attempt to discourage anyone from entering on the minority side with such a large gap to cover. By setting a maximum spread between the majority and minority, we ensure that individual voters recognize there is always hope of changing the outcome of a dispute. The standard voting period is 24 hours, but parties can choose their own time limit If the majority position changes in the last 30 minutes, at that moment, the voting is extended by another 30 minutes, repeatedly if necessary, until a majority prevails throughout the 30 minute extension. To open a dispute, you must stake 1% or more of the contract value on your proposition This required commitment should not be viewed as a fee. It is a vote like any other. As such, if the proposition it supports receives a majority of the vote, it will be refunded and, if tokens were voted in opposition, matched with a reward. If the proposition it supports receives a minority of the vote, the amount voted will be forfeit as a penalty for ruling incorrectly. A party who submits a fair proposal will pay nothing for dispute resolution and may even earn reward tokens. Votes are irreversible © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 45 Appendix 1 - How the Oracles votes The reject vote Because Jur is decentralized, two parties could use it for an illegal contract or something manifestly contrary to their own individual rights. We have considered this delicate ethical problem for the crypto-economy. Consider an example. What if two parties enter into a contract to commit murder? If a dispute arises, the Jur oracles would be faced with the possibility of voting for one or the other parties to this unethical contract. We do not want JUR dispute resolution to be used for unethical purposes. Fortunately, we can rely on the same economic incentive system to guide our Oracles to reject unethical disputes by introducing a special vote value for these rare circumstances. To respond to this type of situation, Jur offers a third type of vote for these special cases called “Reject.” A reject vote indicates the Oracle believes the contract is too unethical or outright illegal to receive any ruling. If the reject votes prevail, the reject voters earn the tokens of the voters who selected either of the two proposed resolutions, and the escrow amounts are simply returned to whoever paid them in. If the reject voters do not prevail, they forfeit their tokens to those who voted for the winning proposal. Special principles of voting for closed hubs Selection of voters The Hub Admin may select voters based on an objective assessment that they describe, or they may allow the voters of the Hub (beginning with the Admins) to select new voters using the JUR protocol to allow users to vote to admit or deny new applicants. Only Certain JUR Tokens Eligible Users can only vote with tokens in wallets attached to the Hub. These wallets have limits. Maximum Token Concentration Since hubs have a smaller pool of tokens than the open Jur oracle system, they are potentially more susceptible to whale attacks. The Hub admin can set a maximum percentage of tokens held by one member to preclude whale attacks. Limits on Total Contract Value Just as Admins can set limits on wallets to prevent one wealthy voter from overwhelming the others, they can also set limits on the total value of contracts on the Hub to ensure liquidity of the vote and resilience against corruption by parties to the disputes. Maximum ratio between the value of contracts in dispute and tokens that are allowed to vote © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 46 Appendix 1 - How the Oracles votes This ratio will be set by the Hub Admins. The goal is to discourage self-interested voting for an unfair proposition by making the potential risk greater than the reward. Requiring that the total potential token vote vastly exceeds the contract values ensures parties to contracts will not want to risk voting unfairly and losing a larger sum that is at stake in the dispute in an ultimately futile attempt to beat the fairness-seeking majority. We expect that Admins will create rules that limit the total value of disputes under consideration to 5% or less of the total tokens owned by the Hub Members. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 47 Appendix 2 - How do Hubs work? Our game theory shows how the simple incentives in JUR will motivate the community to try to select fair resolutions. For simple agreements, the basic version of the system will provide reliably fair results from the start. But some agreements will require Oracles with specialized knowledge or analytical skills to resolve disputes correctly. Users could merely hope that Oracles would wisely self-select - that those with insufficient knowledge or skill would abstain from voting. But since anyone with JUR can choose to vote in the open base layer, users cannot be confident that all voters will be well-informed. JUR will offer a better solution for users who want to limit voting to experts - voluntary associations created and administered by users that we will call “Judging Hubs.” The Hubs are consistent with the principle of decentralization in that any user can create a Hub and Hub use is strictly voluntary. Users wishing to create a contract can choose to create it on the free and open base layer or on any closed or open Hub where such a contract is allowed. A Hub will specify requirements for voting. For instance, a Hub to provide contracts and resolve disputes in the area of engineering services might require engineering certification. A Hub is created by Admins and contains certain elements. Anyone can be Admin and create a Hub and add other Admins if they wish. The Admins can establish and change the settings for their Hub. The compulsory settings are: 1. Application Policy: to become a member of the Hub anyone can apply following the rule established by the Hub (example, to hold a certification of engineering). The decision to admit members can be of two types: a. The Admin decides who can join, conducting their own examination to verify that applicants meet the requirements. This is a good approach for established reliable third parties, for instance, arbitration chambers with whom Jur will seek partnerships. b. Every application is subjected to the vote of the Oracles on the Hub using the JUR voting system. The Applicant opens a “dispute” by staking tokens on the proposition that they should be accepted. 2. Maximum Ratio between value of contract in dispute and tokens held in the wallets of the Hub’s Oracles: i.e. dispute value is limited to 5% of the total amount of tokens held by the Oracles of the Hub, to ensure voting pool is much larger than amounts in dispute to eliminate bribery/buying justice risk. 3. Maximum Ratio between the tokens held by a single Oracle and the Community. I.e. 1%, so that no one Oracle has overwhelming influence due to wealth. Characteristics of Hubs A Hub is a closed entity that limits membership, creating a special group of JUR token holders who have specific skills or qualifications for resolving disputes for the target market of the Hub. For instance, a Hub about engineering contracts might only admit certified engineers with experience as expert witnesses and lawyers with a history of practice in the field of contract enforcement for engineering deals. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 48 Appendix 2 - How do Hubs work? This group of JUR token holders deposits their tokens into a Closed Hub contract and voting on disputes in this closed hub is processed by the ClosedHub contract. In addition to a Closed Hub contract instance for each closed hub group, there is a single Closed Hub Repository contract which records the list of all closed hub groups. The ClosedHubRepository contract will have a data structure similar to this. (there is a single ClosedHubRepository instance): • Mapping from closed hub name to closed hub contract address mapping (bytes32 => address) closedHubs; • Each ClosedHub contract instance would have a data structure similar to: • List of members in this closed Hub mapping (address => bool) closedHub Members; • Minimum escrow value an arbitration must have to use this closed hub uint256 public minimum Escrow; • Maximum escrow value an arbitration must have to use this closed hub uint256 public maximumEscrow; • Balances of JUR tokens staked to the contract by each member mapping (address => uint256) balances; and an API similar to: • Transfer (stake) tokens to the closed hub function stakeTokens(uint256 _amount) • Members vote through the closed hub, specifying the arbitration on which they are voting, and the party and amount of tokens they wish to vote with function vote(address _arbitration, address _voteAddress, uint256 _voteAmount) If a party wishes to, when setting up a new Arbitration contract, they can specify that they will only allow voting to originate from one or more closed hubs (as opposed to all JUR token holders). The ArbitrationFactory contract which is responsible for creating this new Arbitration contract would enforce that the criteria for a given closed hub (minimum / maximum escrowed amounts). Each ClosedHub group can implement bespoke logic to restrict membership and the number of tokens staked (and therefore eligible to be voted ) by each member. For example, some closed hubs may have a single admin account, which is responsible for approving (or rejecting) each individual member application. Alternatively, another approach can be implemented under which, after the closed hub is first set up with a fixed list of members, new members are added based on the vote of existing members. The required quorum percentage and voting percentages would be specified by each individual closed hub (e.g. at least 30% of members must vote and of voting members, at least 70% must agree, in order for the vote to be valid). The ClosedHub contracts can also enforce limits on the number of tokens that can be staked to the voting contract by each individual member. For example, it could enforce that no single member has more than 25% of the total JUR tokens staked to the contract. These rules could be enforced continuously as members stake (or withdraw) tokens from the closed hub. Members can, at any time, withdraw their staked JUR tokens from a closed hub in which they are a member. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 49 Appendix 2 - How do Hubs work? Within an Arbitration contract, if it is initialized with a closed hub (or hubs) requirement, then the Arbitration contract would enforce that all voting happens through the specified closed hubs. Absence of Fees in the Hubs After conferring with focus groups of eager potential early adopters, we have determined, contrary to our original plan, that it is not necessary to allow admins to charge users a fee for all agreements in the Hub. We believe the Hub admins will be adequately motivated by their ability to earn tokens voting on disputes in the Hub and writing contracts to sell to Hub users. How A Hub Differs From A Conventional Arbitrator A Hub offers some fundamental structural advantages over a conventional arbitrator that allows Hub admins to offer dispute resolution at vastly lower cost. Contracts on the hub use a free escrow, and enforcement of the final decision is immediately applied to the escrow. Arbitrators can only offer conventional escrow, and the process does not require escrow, and in the absence of escrow, an arbitrator’s decision may still take time and money to enforce. Then arbitrators must be paid for the time they spend reaching a decision, whereas the Jur oracles pay each other in our incentive-based voluntary system, so there is no need to pay for the time spent deciding on a ruling. Resilience features of the Hubs Most of the principles that apply to the open voting system are also valid in a closed Hub, but to ensure the system remains resilient at the smaller scale of the Hubs, we have added some special features. Whale Attack resistance Hubs only allow specified members to vote. Because the Hub is a smaller group than the general Jur ecosystem, there may be a greater risk of whale attacks. To eliminate this risk, Hub Admins can set a maximum concentration ratio that limits the amount of Jur tokens a member can commit to disputes in the Hub to a specified percentage of the total eligible tokens in members’ wallets attached to the Hub. For instance, a Hub might require that no single oracle be allowed to vote more than 1% of the total tokens eligible to vote in the Hub. Clearly, a Whale attack is not even remotely possible, unless the Admins do a very poor job of vetting their Oracles. Only if an incompetent group of Admins failed to vet their oracles so thoroughly that one person controlled over 51% of eligible tokens through fraudulent identity could a sort of hybrid Sybil/whale attack succeed. Because Jur is decentralized, Hub creators are ultimately free to fail, but the incentives of the system only motivate them to succeed. If they do fail to deliver good service, they will quickly be abandoned by users. Consequently, while it is theoretically possible that a disguised local whale attack could succeed within an extremely incompetent Hub, it is very unlikely to occur in a well managed and frequently used Hub. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 50 Appendix 2 - How do Hubs work? Bribe resistance As we explained above, Jur Hubs have safeguards to prevent one voter from dominating the others and purchasing victory for unfair outcomes by limiting the percent of tokens that one voter can control. But what if one voter seeks to corrupt other voters and convince them to vote unfairly in exchange for bribes of some kind outside the Jur platform? Jur’s concentration ratio makes whale attacks seemingly impossible, but what if someone bribes their way around this limitation? In this case, the same basic system of incentive and risk that makes self-interested attempts to buy unfair outcomes irrationally risky and hence unlikely applies. Unless you are able to control 51% of the total voting pool, voting unfairly entails the risk of simply attracting fair voters who will enjoy your tokens when you forfeit them. There is no reason to assume the risk outweighs the reward. If you can control 51% of the voting pool, you can create an unjust outcome, but probably only once. Users will not stick around for a second bribery-enabled whale attack. And we assert with ratios of 1% maximum concentration, a voter would have to convince at least 50 other individuals in the Hub to engage in corruption. Hubs are created by Admins that vet their members and will make money in proportion to their ability to deliver good results, so they are motivated to try to avoid vetting oracles so poorly that 50 or more of their members are willing to cheat, which is the only context where a bribery attempt .is rational. Still, people are not always rational or competent, and the Jur system is decentralized, leaving incompetent Hub administrators free to fail. It is possible that a bribery attempt could occur, and remotely possible that one could succeed in some poorly managed and soon to be abandoned Hub. Pro buyer - pro seller Hub Could Hubs that tend to favor buyers or tend to favor sellers be a problem? Admins run Hubs to earn money, and they are motivated to attract users. At first glance, we might guess that Hubs would strive to be impartial in order to attract the maximum amount of users. However, this might not always be the case. What if users don’t want impartiality? For example, in a buyers market, sellers are more likely to succeed in convincing clients to enter into agreements on Jur in a Hub that tends to be more sympathetic to buyers in a way that the average person might perceive as pro-buyer bias. For some sellers eager to convince hesitant buyers to enter agreements on Jur and Hub operators wanting to attract business from both parties, a Pro-Seller bias in the Hub might be a solution instead of a problem. Jur is decentralized, and Hubs are free to experiment with definitions of justice that the general public might see as biased in order to deliver the best service to special markets with special needs. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 51 Appendix 3 - Game theory and its implementation In this appendix, we analyze the system of incentives in the Jur environment. We will use game theory and mathematical modeling to demonstrate that the JUR voting system leads to justice and fairness. Readers who can not interpret the mathematical equations can still read the accompanying text, which explains all the relationships described in the equations. A formal model to represent the tendency to Justice of the Jur System We start by describing the behavior of a generic token holder who is preparing to vote: Alan. Bob Bob Alice Bob Alan is in the majority Alan is out of the majority Alan is out of the majority Alice Alice Alan move Alan is in the majority Majority move Fair Fair Unfair Fair Alan is in the majority Alan is out of the majority Alan is out of the majority Unfair Unfair Alan move Majority move © 2017-18 Jur® IS A REGISTERED TRADEMARK. Alan is in the majority When Alan decides to vote, the final majority has not yet been determined. Alan can observe the allocation of prior votes, but he knows the vote could overturn at any moment. We can consider the decision problem with Alan knowing that his choice might take place the instant before the majority is determined. Alan knows that in order to win tokens he must be part of the paid majority, which can only happen if Alan votes as soon as possible for the counterpart who will obtain a majority at the end of the vote. In brief, Alan knows that to win, he must anticipate the behavior of the majority. To predict the behavior of the majority and anticipate it, Alan starts from the fact that all the other voters have exactly his system of incentives. This means that, at the time of the vote, all voters will try to predict and anticipate each other. Let’s remember however that in each dispute there will be connected an agreement made by the parties, in that agreement will be set up some KPI. So that the dispute is for Alan like not a generic question “who do you think is right?”, but something more accurate which includes: 1. To analyze what the agreement states as KPI; 2. To analyze the proofs made by the parties and their explanation of facts. JUR.IO 52 Appendix 3 - Game theory and its implementation Fair Fair Unfair Fair Alan is in the majority Alan is out of the majority Alan is out of the majority To better clarify Alan’s decision-making options and the possible strategies that he can follow, we can represent the possibilities with a Dynamic Entry Game in Extensive Form, widely used in game theory. Alan chooses first without knowing what the outcome of the vote will be. Alan will only be able to earn if the majority make the same choice. Unfair Unfair Alan move Alan is in the majority Majority move Why will the majority choose the fairest resolution? The Schelling Point In Brief We can explain why the majority will tend to choose the fair solution by looking at the work of Thomas Schelling. In a Schelling Point game, participants faced with a question must try to guess the answer of the participants. If you take ten people and put them together in a room with a red piece of paper, then tell them each individually they win a reward if they predict what color the other people will say the paper is, they are all going to say red. There is no incentive to say white. Jur works on this same principle. Token holders are asked, “which proposition is more fair” and told that if they predict the majority’s position and stake tokens, they will win. A fair outcome is more complex than a red piece of paper, of course, but the best strategy to win the reward is to sincerely predict what other people think is fair. The possible token reward provides an incentive to predict correctly. Voters know they will lose tokens if they predict incorrectly, so they also have a disincentive discouraging them from predicting incorrectly. So for instance, if the agreement put a mandatory deadline on the work that Alice has to deliver to Bob and the deadline has not been respected, but Bob is still demanding full pay, while Alice wants a modest 3% discount, we believe Alice has made the most fair position and we believe others would agree, so voting for Alice would be the choice favored by the majority. Attacks on the fair position are just opportunities for fair voters to gain tokens, as we will see below when we discuss Jur’s resilience under different scenarios that might initially seem to create the risk of unfair outcomes. Of course, it is important to remember Jur works best for very clear agreements. Alice and Bob could have specified a penalty for late delivery and avoided a dispute entirely. A dispute that involves subjective issues can only deliver the majority’s subjective opinion of fairness, which, by its very nature, is apt to be more controversial than a decision based on objective factors. We all have our subjective opinions, but perhaps, objectively, the most reasonable way to identify fairness in subjective matters is to concede to the majority. Still, we recommend users rely as much as possible on clear contracts to keep disputes in the objective realm. Jur, like any other dispute resolution system faced with subjective questions, will deliver subjective results. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 53 Appendix 3 - Game theory and its implementation The incentive mechanism for voters ensures that each of them seeks to understand and anticipate the behavior of the majority. It is therefore guaranteed that the mass tends towards a balance. In this section, we will show how this balance is fairness. It makes sense to ask this question because, given the system of distribution of earnings which provides that those who are part of the remunerated majority earn the minority tokens, this implies that the green combination (Fair, Fair) shown in the scheme produces for Alan exactly the same gain of the red combination (Unfair, Unfair). Alan earns if he anticipates the majority regardless of whether the verdict is actually right. The same result can also be observed in the normal form. Outcome Grid - Majority Choice vs Alan Choice Alan - Fair choice Alan - Unfair choice Majority - Fair choice Majority - Unfair choice Alan earns: Alan earns: Majority earns: Majority earns: Alan earns: Alan earns: Majority earns: Majority earns: Where: : Value in fiat currency of the voted tokens by the Majority or by Alan; : multiplier of the amount vote in case of victory, value is close to 1. However, there is a reason why the system definitely tends towards fairness. In fact, as we said before, to predict the behavior of the majority and anticipate it, Alan starts from the fact that all the other voters have exactly the same system of incentives as he does. This means that, at the time of the vote, all voters will try to predict and anticipate each other. In game theory, this is a classic situation in which you have to study the joint behavior of all players in a game characterized by: lack of communication; symmetry of payoffs (i.e. gains and losses). Thomas Schelling (1960) studies and resolves this situation in his main work “The Strategy of Conflict”, in which he elaborates the concept of the focal point. The Focal Point is a solution of the game “that people will tend to use in the absence of communication, because it seems natural, special, or relevant to them”. So our main question now is: what is the focal point for a JUR dispute? The answer is very simple: the Jur focal point is the fairest of the two propositions, according © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 54 Appendix 3 - Game theory and its implementation to what they established in their agreement. Voters are invited to choose the most fair of the two propositions and told they can win a reward for predicting the majority position. Having to predict the behavior of the other voters, they will all vote for the party that they believe will be chosen by the majority. The payoff to stake ratio will be the same for both propositions; there is no differential that could affect voter behavior. Having no reason to assume the other voters are ignoring the instruction to choose the most fair proposition, an individual voter will try to predict which proposition the other voters will consider the most fair. If so, Alan’s best strategy is always to acquire information to understand which proposal is the most fair and vote for that one or abstain if he is uncertain. It is worth noting that the scenario for the Jur system is slightly different from the hypothetical conditions under which Shelling explains the Focal Point because, in Jur, voters do not act simultaneously. Moreover, each voter has the opportunity to see how prior votes have been allocated. Despite these differences, we believe JUR voters will still be drawn to the Schelling Point in the form of a fair outcome. The JUR voters’ ability to see past votes allows them better insight into the view of the evolving majority. We see a slight risk that an early majority could discourage voters from supporting the underdog, but this is only a slight distortion in the system’s ability to find fairness, not a difference in the participants’ sincere motivation to seek it out. Furthermore, it is worth to remember that if an initial majority is established on one hand it can’t be huge since the system doesn’t accept votes that makes the two position farther than a ratio of 1:2. Second, it is worth to mention that in case of an early majority is established there is an incentive to vote against that because Aland would know to be able to earn the matched tokens. In games of chance and betting markets, low probability events carry higher reward to stake ratios. In JUR, the reward to stake ratio is the same for both propositions. There is no advantage in selecting a “long-shot” proposition that the majority is unlikely to think is fair. Because the reward to stake ratio (in the case of winning) is the same for both propositions, voters will select the proposition with the highest perceived probability of being supported by the majority. They will choose the side that they believe most people will perceive as fair. Expected earnings of voters and incentive to vote as soon as possible In order to earn tokens, Alan and the Oracles comprising the majority must vote early enough that their votes are required to determine the majority. If they vote after the majority is established, there are no minority tokens left for them to win, and their voted tokens are simply refunded without reward. Let’s now demonstrate what we said starting from the evaluation of expected earnings of an Oracle. The profit/loss of a generic voter is defined as follow: Where: : is profit / loss of the oracle : amount of votes tokens © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 55 Appendix 3 - Game theory and its implementation : multiplier in case of voting with the majority In other words, in the event of a defeat, T tokens voted are lost. In the case of a victory the voter earns T and an additional percentage of T is earned as reward for taking the time and care to vote correctly. We can model the expected value of the token payout for a generic oracle as1: Where : : expected value of the variable “net gain” G calculated by the voter; : amount of voted tokens; : subjective probabilities that the voter assigns to “Win” (or more accurately “earn” events); : multiplier in case of victory. Given his risk aversion, the oracle requires a risk premium and so he participates in the votation only if the expected value of its gain is sufficiently higher than zero2. This condition is only true if: The variable values: represents the multiplier in the case of winning and may assume the following for the tokens that are in the no match part of the majority. Is the part of the majority that is not rewarded; for the tokens that are in the single match part of the majority; around 2 for the tokens that are part of the double match group3; Note that: 1. If then the voter thinks that, as the voting has just begun, the reward will be 2 so is rational for him to vote if he think that the probability to win is higher than . Note: this only occurs with rare “reject” votes.; 2. If then the voter thinks that, as the voting has just begun, the probability to win atching vote on only one of the two other possible sides is high (the common case when no reject 1. In this case, capital gains from the change in price from currency pairs will not be considered a result of the performance of the voting system. 2. Given the practical purpose of this document, we make reference to utility theory and to utility preferences of individual voters. The expected value of the net gain has to be sufficiently higher than zero because the voter, given his risk aversion, requires a risk premium sufficiently higher than zero to motivate him to act. 3. It is worth to note that the double match group only exists in the rare case of a reject vote. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 56 Appendix 3 - Game theory and its implementation voted is expected) so is rational for him to vote if he think that the probability to win is higher than ½. 3. If then the voter thinks that a lasting majority has already been created so is impossible to take part of the paid majority no matter how certain he is in his prediction, so he does not vote because the expected earnings amount to zero. It is clear that the incentive to vote is higher if the voter is among the first to discover and vote in the dispute. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 57 Appendix 4 - Voting system resilience and borderline case scenarios Jur basic voting system resistance to corruption Resistance to unfair self-interested voting by attack by one of the dispute parties In our system, it is not practical or rational for a party to the contract to knowingly make an unfair proposal and vote for it, hoping to gain by buying an unfair result with votes made in bad faith. The amount in dispute that could be potentially gained by “buying” an unfair verdict is tiny in comparison to the total potential vote. It would be irrational to attempt to buy an unjust outcome knowing the size of the possible loss far exceeds the size of the possible gain. Both parties should vote for themselves, sincerely believing their proposal is the most fair, but neither party has an incentive to risk more than the disputed amount or make an unfair proposal. A party that deliberately makes an unfair proposal and attempts to buy a biased result by voting unfairly is simply offering their money to the distributed oracle, which controls much greater collective wealth than any individual. The fair majority will enjoy the forfeit tokens of the selfinterested voter, and Jur will function better for their unwittingly generous contribution that creates an incentive for attentive voting Let’s give an example. Assume Bob and Alice have a dispute for payment of 1000 USD. Is it possible that one of them will try to corrupt the Oracles to win the dispute? Is it possible that Bob or Alice would pay an amount equal to or greater than 1000 USD to unfairly gain 1000 USD? The answer, of course, is no. No one will pay more to create corruption than they can gain from that unethical act. The number of tokens the Oracles might stake (theoretically, up to as much as all existing tokens not committed elsewhere) is potentially vastly higher than the amount in dispute. Knowing this, Bob will not embark on a fool’s errand by proposing something he knows is unfair and staking tokens in hope of an unfair result. So this form of corruption by one of the parties to the dispute is not possible. Voting for your own unfair proposition or conspiring to gain by voting for an unfair result in exchange for sharing the proceeds of an unfair result is just giving away tokens to Oracles eager to gain by delivering a fair verdict. Sybil attack resistance In a Sybil attack, an attacker creates a large number of false identities to attack a reputation based network. The Ethereum blockchain on which Jur is based is resilient against node level Sybil attacks. We can consider another type of hypothetical attack that could be broadly classified as a Sybil attack. A single user could create many Oracle accounts on Jur and vote from many different accounts in order to conceal their “whale” attempts at manipulation. However as we will © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 58 Appendix 4 - Voting system resilience and borderline case scenarios see below, whale attacks are risky to the point of being irrational, and hence unlikely. Concealing the fact that the votes are coming from a single source does not change the incentives for other voters, so nothing is gained. Whale attack resistance One large token holder could try to corrupt a dispute by purchasing an unjust verdict, motivated simply by a desire to win tokens of the losing side, to gain directly or indirectly from the verdict, or a competitor’s desire to destroy JUR. There are several reasons we think this attempt is so clearly doomed it will never happen. To be confident of a victory, a whale attacker would have to own 51% of JUR. With the team and the founders controlling almost 40% at the outset, the cost of buying up over 75% of the available tokens would be prohibitively immense. A whale attack of this kind on JUR would be a sort of suicide mission since the attack would reduce the value of the whale’s massive holdings. Nevertheless, to make absolutely certain whale attacks cannot pose a threat, JUR only allows votes on the majority side until the majority exceeds the minority by 100%. Consequently, the whale cannot scare away minority voters by creating a vast margin of victory to overcome. They must wait for the minority to respond and narrow the gap, voting in iterations. This, in turn, allows voters on the minority side to notify others and spread the word of the apparent whale attack. Thus anyone who would try to obtain an unfair outcome by voting a very large number of tokens simply takes a high risk of losing a very large number of tokens. Why there will be unfair votes cast, even without corruption Our game theory shows that there is never an incentive for anyone to vote Unfairly. Oracles will only vote on the Unfair side if their perception of Fair and Unfair does not match that of the broad market for JUR tokens. This gives rise to two questions. Why should someone vote on the wrong side? And what happens if no one does vote on the wrong side? Most likely, the first to vote on the wrong side will be one of the two parties who will vote in favor of their own resolution, seeking to benefit from Unfair payment of the contract, or, blinded by ego, misunderstanding what is Fair and what is Unfair. On the other hand, other voters who are not a part of the contract choosing sub-optimal Unfair choices will not do so out of bad faith but because they fail to apprehend which side is likely to prevail. This effect will systematically involve some voters (weak voters) and marginally all other voters run the risk of making a mistake, on occasion. Jur’s resilience under challenging scenarios System stability in the absence of votes for the unfair proposition If one side does not receive any votes, the system still works. The party that opens the dispute must vote for themselves. The opposing party has chosen not to accept the dispute opener’s proposal, revealing that they believe their own is fairer, so they should also vote for themselves. If © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 59 Appendix 4 - Voting system resilience and borderline case scenarios they do not, and all votes are on one side, the system still works. The party that opened the dispute and anyone who voted on their side are refunded their tokens and the dispute is resolved in favor of the one resolution that received all support. The party that would not even vote for their own proposition loses the dispute. Weak voters: self-selection The best strategy for weak voters - those who cannot accurately predict what the majority believes is fair, will be to abstain from voting. In the case of more complex contracts, only those who are able to really understand them will have a rational incentive to vote. If the weak voter votes, he risks losing his tokens in favor of the prevailing voters. This leads to a natural selection mechanism within the Jur community of oracles that will result in juries composed only of voters who sincerely believe that they are capable. In summary, the weak voter will have three choices: 1. Continue to lose tokens in favor of those who vote correctly. In this case, the system will tend to naturally select the most capable voters; 2. Sell their tokens to other people who want to start or increase their voter activity within the Jur; Reward vs gambling in Oracles activity Jur does not provide a platform for “gambling on justice.” Jur simply provides a clear incentive to make a fair assessment and to make it as rigorously and rapidly as possible. We can more accurately say that Oracles earn tokens for studying the case and delivering a just verdict rather than assume that Oracles win tokens for participating in a ‘game of chance.’ The rational person will choose the more likely event that coincides with the highest probability of success because there is no incentive to vote on an unlikely event. Voting on low probability outcomes does not lead to a higher return.4 There is no incentive to try to earn tokens by voting unjustly. When an Oracle notices that someone has voted on the wrong side, he can easily vote against him and take his tokens. Jur allows those who make the right decisions in a timely manner to acquire tokens voted by those who make the wrong decision. Such a system results in immediate accountability for each participant. Unlike other previously proposed online Jur systems, Jur - at the layer of the Protocol - does not 4. Jur Legal team will analyze jurisdictions laws on gambling and strive to show Jur does not involve gambling because: 1. An Oracle gets a reward that is a payment for doing useful work, a “success fee.” The fee is not aleatory; 2. The money that a minority position Oracle loses is a fee for failing to deliver “work well made”; 3. The system’s game theory and accompanying rhetoric discourage chronic losers from continuing; they should realize they are not well qualified to judge after a few losses, recognizing there is no random element, only their ability (or lack thereof) to rule justly with the majority 4.Significant work is required to examine and rule, discouraging compulsive behavior. 5 Jur does not offer the thrill of higher returns for greater risks. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 60 Appendix 4 - Voting system resilience and borderline case scenarios require anyone to determine the fitness of an Oracle, other than the Oracle himself. The Oracle himself will be reluctant to vote on matters that he is not confident in, or on topics in which he lacks expertise, because of the risk of token loss. Consequently, competent Oracles will self-select. Token Volatility and Votes The token volatility should not impact votes on Jur. Jur oracles will tend to be people who hold Jur long term, so they should not be concerned about the volatility of a short-term period of 24 hours. Even if someone wishes to vote as an oracle and only hold Jur for the voting period, regardless of short-term price movements, the voting incentives remain the same. A voter with very low confidence in their choice might find the possibility of short-term downward price fluctuation sufficient to reduce their expected value of voting to less than zero. The system will work fine without voters who are not confident in their choice. Wisdom of the crowd and “beauty contest effect” We can explain the beauty contest effect with a parable of sorts. There is a beauty contest among ten girls. There are ten strangers who are promised a reward of $ 100 only if they vote for the girl most voted by the others. They may have their own personal feelings about beauty, but they will try to anticipate the other judges’ opinions rather than following their own. So for example, if judges were to choose between Marilyn Monroe and an anonymous woman that they thought plain by conventional standards but uniquely beautiful in a way that transcends the beauty of her famous competitor, some or all of them who otherwise would have chosen the other girl, may pick Marilyn Monroe. In the case of Jur, there are two differences. Jur voters must put their own token at risk if they want to vote. If they perceive an uncertain outcome, due to the fact that dispute revolves around an excessively subjective judgment, they will be unlikely to risk tokens. Moreover, we think users will be careful to submit agreements with clear Key Performance Indicators and avoid reliance on subjective criteria as much as possible. When users submit unclear agreements, if they come to a dispute they will discover the results are unpredictable. We imagine most users can learn from the examples of others to avoid the pitfalls of vague agreements. Some will no doubt need to learn on their own. In general, we expect users to become increasingly adept at recognizing what agreements can work on JUR and how to explain agreements clearly. Lack of interest in voting One might be concerned that disputes over small amounts will not attract the interest of voters. Whether the dispute is large or small, you can always potentially double your money if someone has voted in opposition and you vote with the majority early enough. If lack of oracles appears to be a problem, the Jur team will address this by publicizing the opportunity to earn rewards. Last - minute vote upsets Jur is designed to prevent last-minute attempts to overturn the majority in a sort of sneak attack on the consensus position. If the majority position changes in the last 30 minutes of voting, the © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 61 Appendix 4 - Voting system resilience and borderline case scenarios voting period is extended for another 30 minutes until there is a stable majority for 30 minutes. Thus voters who might have abstained because the majority was already clearly established have an opportunity to vote if it is overturned late in the process. Very small difference in proposed resolutions If the parties propose two solutions with a very small margin of difference, one might be concerned that dispute is difficult to resolve fairly. When the proposals are very similar, it is more difficult to predict what other people will find most fair, increasing the risk involved in voting. We do not see this as a major problem. If the proposals are so close, we believe it is likely that the parties will agree to resolve the problem amicably. If not, low voter interest could result in a less than robust choice. Since the proposals are so similar that people feel unable to say which is more fair, we assert that picking the “wrong” one is only a small problem if it happens. Two proposals that are so alike that is hard to say which is fair could be viewed as a sign that the system is creating a more fair behavior in relationships. Parties in dispute know the Jur Oracle will deliver a fair outcome, so they both propose very fairly. If it is very hard to choose, that’s not a problem; that’s the result of a solution that’s working well. Clear majority established If a clear majority is established early but happens to support an unfair position, one might be concerned that voters who correctly recognize the fair position on the minority side will be afraid to vote. For this reason, we prohibit voting on the majority side when the majority token vote count reaches 200% of the minority count. This ensures that the margin will always be surmountable, inspiring voters to rebel against an unjust majority should one occur. Disputes that involve subjective issues Disputes with clear KPIs allowing objective assessments will be resolved fairly on Jur. For instance, if an agreement on Jur involves transferring shares of a company and a dispute arises because the buyer claims the shares were not transferred, Oracles can go to a public listing to check and see if the shares were transferred and rule accordingly. On the other hand, if KPIs are not clear, it will be difficult for the JUR oracle to ascertain what is truly fair. For instance, if Alice and Bob agree that Bob will “provide a beautiful website in a reasonable time for $1,000” and nothing more, the results of a dispute about whether Bob has complied will be utterly subjective. It is also possible that despite a clear agreement, some external factors will arise that bring a subjective element into the dispute. For instance, Bob might not be able to deliver a clearly defined product on time because of health issues and ask for leniency because of this. If Bob and Alice have not included a clause about illness, the Oracle’s ruling will be subjective. Still, poorly defined agreements and problems that require subjective assessment are a problem for any dispute resolution system. By allowing discovery of the majority opinion, albeit a subjective and controversial one, Jur handles these less-than-ideal dispute resolution scenarios in the best possible way. © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 62 Appendix 5 - Smart Legal Agreements Benefits Smart Agreements on JUR offer users the ability to easily make agreements, pay/receive money without worries, and resolve any disputes that might arise, all at a tiny cost. JUR represents an evolution in the creation of digital agreements. We can separate currently available digital agreements into Do It Yourself Legal Contracts, Smart Contracts, Smart Legal Contracts, and Smart Agreements. Let’s consider several categories of agreements, beginning with traditional legal contracts. Legal Contracts: conventional legal contracts, signed in paper or virtual form. Conventional legal contracts are often expensive to draft and may require consultation with lawyers. In the case of a dispute, courts provide slow and costly resolution. DIY Legal Contracts: “Do It Yourself” Legal Contract services, such as LegalZoom5 and Rocket Lawyer6, have been available in the U.S. for many years. These companies prepare interactive contract templates and sell them online. The user can fill out a wizard and get a sufficiently precise contract, saving a lot of money. While the customized template innovation saves users a lot on contract creation expenses, it does nothing to resolve the issue of slow and costly dispute resolution; Smart Contract: “Self-enforcing” smart contracts that use an external Oracle to decide when to move funds are available on the blockchain. This type of contract has limited applicability. An external oracle cannot assess subjective information. Even in situations where the contract seems to depend on a single condition that an external Oracle can report, technical failure or other unforeseen complications can render the smart contract unable to deliver a smart resolution. If a smart contract does not include a legal contract by reference to back it up, the legal status of the agreement may be ambiguous. Smart Legal Contract: A smart contract that incorporates a legal agreement and meets criteria by including those elements defined as “essential” for the type of contract. These required elements vary between countries and are to be interpreted under the laws of a specific jurisdiction. The smart legal contract has a reliable backup system in case it fails. The bad news is that the reliable backup system is reliably costly and slow. Smart Legal Agreement: An agreement created with an automated mechanism with access to a consensus-based dispute resolution layer. Such agreements will not be suitable for every type of business relationship - at least not until the sophistication to judge every type of dispute is available in the dispute resolution layer. But many agreements will be suitable, providing they are explained clearly. This approach has the advantages of the previous categories, low cost and efficiency, leveraging of blockchain technology to provide low cost escrow and payment. Where an arbitration clause and/or additional elements required are inserted in the text of the agreement, such agreements could also be considered to be Smart Legal Agreements, since they would also have legal validity. 5. www.legalzoom.com 6. www.rocketlawyer.com © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 63 Appendix 4 - Voting system resilience and borderline case scenarios © 2017-18 Jur® IS A REGISTERED TRADEMARK. JUR.IO 64