Dispute & Mediation
Whenever two people meet to trade something, disagreements are bound to happen. When a trade between multiple parties is not entirely automated, there must be a process to resolve any conflict. This system is known as a dispute resolution system.
Users of centralized marketplaces are familiar with dispute (or appeal) systems. It assures them that the platform operators will listen, deliberate and possibly resolve a dispute in their favour.
However, many users on centralized marketplaces have found the dispute process unfair, arbitrary, and lacking in transparency, with no way to appeal a ruling.
Joint Dispute System
The Joint protocol features a decentralized dispute resolution protocol designed to be scalable and secure against manipulation.
It leverages the wisdom of the crowd to create a decentralized prediction system where staked community members resolve disputes.
The dispute system is open to anyone. As a permissionless system operation on the blockchain, it is fair and consistent and executes rulings automatically.
The Joint protocol's dispute system is driven by users known as mediators.
A mediator is a person who is drafted into a dispute to review the trade details and payment evidence and then predict the outcome.
A minimum of three (3) mediators are called into a dispute by default. After reviewing the evidence, the mediators must predict and vote to release the token or cancel the disputed trade. Finally, the Joint protocol will execute the majority ruling.
An economic requirement must be fulfilled to participate as a mediator on the Joint protocol; intending mediators must purchase a mediator ticket.
Additionally, they must deposit a specific amount of P2P tokens into their ticket; the deposit is called a security deposit. Security deposits ensure mediators have skin in the game and can be penalized for bad behaviour.
The amount of security deposit a ticket must have is determined by the market the mediator intends to join. A market creator can set the minimum security deposit required of mediators. If a ticket with insufficient security deposit attempts to join the market, it will fail.
A mediator ticket is purchased directly from the protocol. A ticket is purchased using the P2P token. The protocol determines the price of a ticket based on the supply and demand within a 24 hours window. When the ticket demand is high, the ticket price rises. When demand is low, the price drops.
At any point, the total supply of mediator tickets cannot exceed 10,000. When the security bond of a ticket is withdrawn, the ticket is destroyed, and the supply drops by 1.
A ticket goes through several states throughout its lifetime.
A new ticket cannot immediately join a market even if it holds a sufficient security deposit. Instead, it must remain unused for some time; this wait time is known as the maturation period. Once the ticket passes the maturation period, it is considered mature and can join a market.
A mature ticket enters the join state when the creator successfully joins a market. As a joined ticket, it will be randomly drafted to mediate in a dispute. While in this state, it cannot expire or be cancelled.
When a ticket is created, a maturity and expiry time is set. The Joint protocol expects the ticket to join a market shortly after becoming mature. It will expire if the ticket does not join a market before its expiry time. An expired ticket cannot join a market; the ticket owner must create a transaction to cancel it and another transaction to withdraw its security deposit.
A ticket that has not joined a market can be cancelled. Cancellation is the first step required for a ticket's security deposit to be withdrawn by the ticket creator. When a ticket is allowed to expire, it must be cancelled and its deposit re-claimed. Ticket cancellation is not instant; it takes effect after a duration has elapsed. This delay prevents bad actors from destabilizing the ticket market through an abrupt exit.
When a ticket's security deposit has been withdrawn, we say the ticket is drained. A drained ticket is removed from circulation. A ticket can only be drained after it has passed the cancellation period. After cancellation, a ticket is drained instantly.
The Joint protocol does not support the transfer of tickets from one wallet to another. Delegation is designed to eliminate the creation of a secondary sale of tickets.
However, there is a usefulness in allowing other wallets to aid in mediation duty. For example, a company offering mediation services may want to allow multiple employees collectively handle dispute call-ups without sharing the wallet's seed.
Ticket delegation allows a ticket owner to delegate their ticker to a finite number of wallets. Once a wallet becomes a delegate, it can vote on behalf of the ticket owner.
The process of randomly selecting a ticket to mediate in a dispute is known as drafting. Ticket owners that have joined a market should expect to be drafted at any time. Once drafted, the ticket creator or delegate must participate in the dispute process or risk getting their security deposit slashed. The Joint protocol miners are responsible for drafting mediators.
Un-drafting a ticket means removing it from a dispute. A ticket can only be un-drafted after the dispute's ruling has been executed by miners. When a ticket has been un-drafted, it will be immediately available for new disputes. The Joint protocol miners are responsible for un-drafting mediators.
Voting is the primary function of a mediator. When a mediator is drafted to a dispute, they are expected to review the trade details and evidence presented by the swap participant before casting a vote.
A mediator must predict what they believe is the right decision and what they think other mediators will decide based on the evidence. Then, they can only vote either to release the token locked in a swap or to ****cancel**** the swap. They cannot abstain from a vote.
When a mediator's vote is among the majority voters (winners), they will receive a reward. But if their vote is among the minority voters (losers), a fraction of their security deposit is slashed and shared as a reward to the winners.
If a mediator abstains from voting by not casting a vote or not completing the voting phases, a fraction of their security deposit will be slashed.
How Voting Works
The Joint protocol voting system incorporates several phases over a fixed duration.
- Drafting Phase: In this phase, mediators are drafted into a dispute. The dispute does not begin until all mediators are fully drafted.
- Evidence Phase: The evidence phase is where the mediator is expected to request and review evidence from the swap participants.
- Vote Commit Phase: The mediator must encrypt and send their decision (release or cancel the swap) to the smart contract after the evidence review phase.
- Vote Reveal Phase: After the commit phase, the mediator must reveal their previously encrypted vote so it can be tallied.
- Appeal Phase: In this phase, the result of the dispute is already known to all swap participants. The swap participant can re-appeal the dispute to start a new dispute.
- Execution Phase: If the dispute is not re-appealed, it will enter the execution phase, where miners execute the outcome.
On Joint protocol, the mediator role is incentivized. There are two main ways mediators get rewarded for their work.
A slashing reward is earned when the security bond of mediators who voted in the minority (loser) is slashed and distributed to the majority voters (winners). A fraction of the slashed deposit is burned, and the rest is shared.
The Joint protocol can also mint new P2P tokens to reward mediators. However, this is only enabled for markets with at least one verified token — verified tokens are tokens with a large and thriving community. Joint governance is responsible for deciding which tokens are considered verified. The community will be able to decide what tokens should be verified.
Joint protocol allocates a fixed amount of P2P tokens for mediators of disputes created within a window. Their mediator score determines the amount a mediator receives — a mediator score measures the mediator's success rate in their career.
The Joint protocol considers the mediator to be critical to the protocol's success, as such irresponsible behaviours, mistakes, or incompetence will not be tolerated. There are two situations where a mediator's security deposit is slashed:
- When a mediator does not predict and vote for the majority ruling, a fraction of the mediator's security deposit is slashed.
- When a mediator does not vote, they will also be slashed.
Most of the slashed deposit will be distributed to mediators that voted for the majority ruling or burned.
The slashed deposit is equally distributed to the successful mediators if the market does not include a verified asset as the base or quote token.
However, if the market does include a verified token, the entire slashed deposit is burned since verified markets receive protocol rewards via inflation.
A re-appeal is an appeal against the outcome of a dispute. The Joint protocol allows swap participants to re-appeal unlimitedly as long as the dispute is within the appeal phase.
A disgruntled swap participant can use a re-appeal to lock the disputed tokens in a never-ending dispute perpetually. To discourage appeal spam, a re-appeal must include an anti-spam deposit paid in the protocol's P2P token.
For every re-appeal initiated, the required anti-spam deposit is doubled. So, it will become increasingly costly to create re-appeals.
When the dispute is finally executed, and the re-appeal initiator is ruled against, the anti-spam deposit is awarded to their counterparty. However, if the appeal does not succeed due to not reaching a quorum, the deposit is returned to the initiator.