Q Protocol: Arbitration Rules Adapted for DeFi Disputes, Signaling Industry Maturity

• Decentralized Organisations to Resolve DeFi Disputes through Q Protocol
• Q Protocol's Constitution and ICC Arbitration Rules
• Brief History of Dispute Resolution in DeFi
• Advantage of ICC Rules in Private Arbitration
• Increased Credibility in DeFi Sector
• Implementation of ICC Arbitration Rules in Q Protocol's Constitution
• Additional Services of Q Protocol

Decentralized Organisations to Resolve DeFi Disputes through Q Protocol

Q Protocol, a service providing blockchain governance for decentralized organizations, aims to utilize the International Chamber of Commerce's arbitration court rules to resolve DeFi disputes. The International Court of Arbitration's framework being used in the DeFi space is an unprecedented event adding significant credibility to the industry.

Q Protocol's Constitution and ICC Arbitration Rules

The constitution of Q Protocol establishes the system's rules including a resolution mechanism based on ICC's rules. This protocol enables developers to construct organizational constitutions that are governed by smart contracts, including off-chain methods for resolving disputes that cannot be addressed by the code. The system's rules, laid out in Q Protocol's own constitution, include an option to use the arbitration mechanism of the century-old International Court of Arbitration.

Brief History of Dispute Resolution in DeFi

Dispute resolution has historically been a challenge in the DeFi sector. An instance of this was the disagreement between the Aragon Foundation, which was overseen by the Swiss entity Aragon, and a group of activist investors who showed interest in the project's ANT token and its multimillion-dollar treasury. This clash led the foundation to wind up and transfer its assets worth $155 million to token holders. Nicolas Biagosch, co-initiator of the protocol, declared that their system could have provided a resolution to the Aragon argument.

Advantage of ICC Rules in Private Arbitration

Entities often prefer to use ICC rules for conducting private arbitration as the process is faster than those under nation-state jurisdictions. Alexander G. Fessas, Secretary General of the International Court of Arbitration, confirmed that they are in a capacity to handle matters referred to them, except when it would defy ICC's legal framework. He also verified that the International Court of Arbitration has already handled disputes related to blockchain.

Increased Credibility in DeFi Sector

Although this isn't a first instance, the fact that disputes within the DeFi industry can be resolved using the ICC's framework, a leading global arbitral institution, significantly adds to the sector's credibility. Fessas also noted the increased decision of businesses in emerging markets like blockchain to opt for reputed institutional arbitration. He expects this trend to continue, especially in specialized technologies.

Implementation of ICC Arbitration Rules in Q Protocol's Constitution

Thirteen projects that are participants in the Q ecosystem have agreed to the private contract of the Q Constitution. They have consented that the ICC Court of Arbitration, based on the Q Constitution and its procedural rules, will be the sole mechanism for resolving disputes, as an alternative to nation-state court systems. Biagosch also clarified that the ICC will always retain the right to not handle the case based on its set rules.

Additional Services of Q Protocol

Q Protocol not only provides dispute resolution through the ICC but also offers services like decentralized discretionary decision-making and enforcement of rules beyond code. Since launching its mainnet operations in March 2022, as many as 123 DAOs have built their organization on Q, adding to the projects that use the governance services.

Edited by Jonathan Stoker