When first designing Aragon, the goal was to have organizations run entirely trustless. Thus, we created a platform to create organizations governed by trustless and immutable code. Now, when we say that these organizations run in a trustless manner, we're talking about how to describe the laws under which the code runs. Code is trustless when deployed on the Ethereum blockchain. It won't change at the whim of a person, it will run as designed, following the logic set forth in it.
Yet, it was clear that we can't account for every possible circumstance in our code. Even if you manage to encode tons of variables into the code, there are things you cannot possibly encode because the blockchain isn't aware about the physical world. And often, in the case of disputes, things are subjective and up to interpretation.
Our solution to this problem is the Aragon Network Jurisdiction. A decentralized jurisdiction to solve subjective disputes as an Aragon Network service.
The Aragon Network Jurisdiction will first define a set of contracts to arbitrate disputes between parties. Serving as a baseline set of rules for arbitrators, Aragon Network token holders will vote on the initial terms of the contracts.
Most things required to run an unstoppable, trustless organization can be created in Aragon. All in a modular way. So that every user can choose the parameters that they want to incorporate in their organization. And all organizations that join in the Aragon Network must agree to use the decentralized court. While we expect disputes and conflicts to be rare cases, this process will protect individuals from the objective nature of smart contracts.
The arbitration mechanism requires an individual that has a dispute, to open a case and post a bond. The bond will be locked for the period of the arbitration process and returned if resolved in favor. If not in favor, the bond will be kept as a Network reserve. This should effectively discourage unnecessary cases. Only applicants that have a legitimate reason for dispute will post a bond.
In extreme cases, there may be cause to freeze operations of the organization. For example, when all stakeholder funds are at risk. Any organization shareholder can raise an issue where the company's contracts are frozen and moved to a state of review.
When an arbitration begins, five judges will be randomly selected from a pool of volunteers. Volunteers are individuals that have posted a bond indicating their interest in serving as a Judge.
The five selected judges will review Aragon Network Jurisdiction basic rules, any applicable organization-specific rules, and materials provided by the parties involved in the case.
After reviewing the rules and materials, the judges will vote on the final judgement of the case for this round.
If the applicant is unsatisfied with the ruling of the Decentralized Court, they have the option to elevate the issue to the next realm. This is done by posting an even larger bond than before.
For this round of court, we will use a prediction market where all the Judges of the Network can take part — providing the applicant with a much larger audience.
Again, the judges will review the rules and materials, and vote on their judgement.
If the applicant still finds the issue unsatisfictory, there is the Supreme Court of the Aragon Network Jurisdiction.
In Supreme Court, the judges will be composed of the top 9 judges by ANJ payout. In other words, these are the individuals with the highest ranking in resolving Aragon Network Jurisdiction cases.
The process will be like the previous rounds, but this time the judgement will be final with no appeal process. The judges of the previous round will get rewarded or penalized according to the ruling of the Supreme Court. If they agree with the previous round's judges, the judges from that round will be rewarded. And in the opposite decision, the judges of that round get penalized for a call that was overturned.
The Aragon Network Jurisdiction provides the tools needed to solve all issues that are not accounted for in the smart contract code.
It creates an incentive for Aragon organizations to join and take part in the Aragon Network. All parties that want to interact with an organization are guaranteed that, in the case of a breach of trust not covered by the contract, their issue will be resolved. Also, if a bug is discovered that threatens the organization's existence, it can be stopped by opening an arbitration that freezes all activity until the issue is resolved.
End of Part 1
In the next part we'll dive into how the Aragon Network Token is used as a bond and an incentive for the Aragon Network Jurisdiction.