Zeitgeist Launches Groundbreaking Decentralized Court for Prediction Market Oracle Disputes

Polkadot-based prediction market protocol Zeitgeist has announced the creation of a revolutionary decentralized court system it says will resolve disputes stemming from inaccurate oracle reports. 

The system is seen as a critical step to ensure the viability of blockchain-powered prediction markets, which depend on complete accuracy from integrated oracles.

Judge, Jury and Delegator

Oracles perform a vital role in prediction markets, providing real-world data and verified results for all manner of betting markets, whether a wager is being placed on the price of Brent crude or the total market cap of the crypto market during a particular quarter. The credibility of prediction markets hinges on the ability of oracles to act as a bridge between on- and off-chain worlds.

What Zeitgeist has advanced with its decentralized court system is a means by which oracles can be put to the test whenever their data is contested. This will be achieved through a system of jurors, as in a real-life courtroom. 

Unlike in a real courtroom, however, jurors cannot retire to the bowels of a grand old courthouse to discuss the finer points of a case: in the Zeitgeist system, they are instead incentivized to reach consensus independently according to the Schelling point – a concept in game theory that suggests people come to a common truth in the absence of communication to avoid coordination failure.

As well as jurors, Zeitgeist’s innovative stake-weighted system relies on delegators who assign their voting rights to jurors they trust to act honorably. Jurors shown to vote on the correct outcome, as well as the delegators who back them, are rewarded with tokens for helping establish impartial consensus. While those responsible for false submissions are penalized. 

This novel approach motivates everyone involved to strive for a fair resolution in cases where oracle data is unclear. The developer team behind the product says the algorithm that underpins the decentralized court has been precision-engineered to ensure a fair degree of risk for everyone. 

Zeitgeist devs also argue that participating in the system is analogous to staking digital assets – only with a sense of responsibility being a motivating factor alongside the potential for profit.

A Decentralized Appeal Process

All contested oracle reports can lead to a dispute being activated and the court being convened. While the Vote Phase sees jurors cast their votes as encrypted hashes, the Aggregation Phase sees votes counted and an outcome reached. There is also an Appeal Phase should anyone wish to contest a result, with up to three appeals permissible for each case.

To disincentivize appeals that have no basis, each appeal increases the staking requirement. Moreover, the stake of jurors and delegators appearing in appeal cases won’t get slashed for decisions made therein. If an appeal is successful, it escalates to a global dispute system that involves the wider ZTG community to resolve.

All Zeitgeist users can put themselves forward to participate in the decentralized court via the existing app.

The idea of decentralized justice is not new. Kleros is just one example of a peer-to-peer arbitration service that solves disputes in a fast, secure way. Zeitgeist’s decentralized court, however, is the first implementation of such a solution in the prediction markets arena.