Using Kleros’ Token Curated Registry you can lower resource costs dramatically, bring transparency to your exchange and directly engage your community. Find out how below.
As an exchange, choosing which tokens to list is a stressful and time consuming process. Due diligence on each project including significant research into founders, the team and the whitepaper all cost time and money.
What if there was a way to effectively ‘outsource’ this for a fraction of your current resource cost whilst still enjoying a premium service?
Kleros has designed an efficient and quality product to crowdsource the token vetting process to a high degree.
What this means is your exchange can take advantage of cryptoeconomically incentivized users who will complete nearly all the due diligence process for you.
No longer is it necessary to have a centralized team member taking the flak from rejected projects who did not fit the criteria, or those that have a large hype but too many red flags hampering their listing efforts.
With Kleros, the hive mind does the work honestly and coherently. In return for doing so, users can make some potentially large gains.
In Kleros, submitted tokens go through a number of vetting processes which require a ‘skin in the game’ deposit made in ETH. Combining the power of the decentralized mind with well researched economic incentives creates an extremely powerful due diligence process that goes well beyond just a skim read of white papers or a brief look at GitHub commits.
Now, your vetting team potentially extends to millions of users, some of which may know a thing or two about cleverly worded scam projects having spent years themselves deep within the crypto ecosystem.
Your slick (and highly knowledgeable) legal team know their Bitcoins from their Bitconnects, but like thousands of other unfortunate users did they go through the trauma of an intricate ERC20 exit scam cleverly masquerading as a real project? Probably not.
Through Kleros, users having lived through these moments personally will bring their valuable (and hard earned) learnings to your token vetting process.
This all sounds very fancy, break it down for me...
Let’s run through the process using the same flow seen in the Ethfinex badge listing registry which can also be adapted to a plethora of further use cases (Content moderation, e-Commerce listings and really, any sort of list...) Before using Kleros, the Ethfinex team were responsible for both legal vetting of each project and the decision to add the token to the public voting pool for a community vote.
This brings with it a couple of hurdles:
1. Fees paid to crypto experts and lawyers for each hour worked on vetting projects and teams. Even though most of these projects will not be worth the time, currently they all are researched carefully to extract the worthwhile projects from the poor ones.
2. Team members responsible for interacting with projects can be pressured (and in some cases, harassed!) into accepting a tokens listing. Projects and agents can and will attempt to ‘bend the arm’ of the relevant exchange listing contact even when the token is of dubious quality.
After switching to Kleros, the first point is nullified due to the crowdsourced vetting team you will attain. The second point is now also moot due to the fact there will be no single representative in charge of making that decision in a decentralized token listing.
“Why didn’t you put our XYZ Token forward for listing?"
"Well, we at ABC Exchange have no way to do so as it’s completely in the decentralized communities hands.”
All in all, this is a huge win for both cost cutting practice and exchange resource allocation.
So why would you want to use this on your exchange? Simply, because it’s more efficient, cheaper and 'always on'.
Kleros can be used in tandem with your existing team to review a large pool of tokens down to a handful of the very best which are then reviewed in-house. This frees up precious legal bandwidth to apply to other areas of your core business.
High quality Vetting
By using Kleros, you open up the vetting process to a huge spectrum of the ecosystem who may have greater insight into key aspects of what makes a token legitimate or adherent to certain criteria.
For example, a token project who applied for the Ethfinex badge was found to have a fake CTO after some extreme investigative work by our decentralized jurors. The full evidence can be read here (it’s juicy) and the level of investigation (with references was of an extremely high level.
Paralegal Service with Potentially Large Cost Savings.
By using Kleros, your legal team is presented with a finely tuned list of projects to review as opposed to a large pool of tokens many of which will not fit to the stringent regulations and legal practices you follow.
Due to Kleros’ financial incentives to root these non-adherent tokens out, legal time needed to review applications will be drastically cut, and therefore, overall costs are lowered and resources freed up for elsewhere.
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