Outcome-Anchored Settlement

Settlement Anchor

Each variance-based position is associated with a specific underlying prediction market and its outcome space. When that market resolves, Variance Markets consumes the final, objective outcome as a settlement anchor.

The protocol does not:

• reinterpret the outcome

• adjust or weight the resolution

• introduce subjective truth

• override the base market

The resolved outcome is treated as immutable input.

Separation of Concerns

Outcome correctness and belief dynamics are treated as independent dimensions.

• The underlying market determines what happened

• Variance Markets evaluates how the market behaved before it happened

This separation allows:

• correct outcome + incorrect belief dynamics

• incorrect outcome + correct belief dynamics

Both cases are valid and settle deterministically.

Settlement Inputs

Settlement uses only:

• the final resolved outcome

• recorded variance signals up to resolution

• normalized variance scores

• regime and divergence metrics produced before resolution

No post-resolution data is used to retroactively alter signals.

Signal extraction and scoring stop immediately once the outcome is resolved.

Settlement Logic

Settlement logic evaluates variance-based positions against:

• the realized outcome

• the historical evolution of variance signals

Payoffs depend on whether a position’s conditions on belief divergence, persistence, or regime behavior were satisfied given the resolved outcome, not on whether the outcome itself was predicted correctly.

This ensures:

• deterministic settlement

• no forward-looking bias

• no oracle ambiguity

Determinism & Verifiability

All settlement inputs are:

• derived from public market data

• reproducible from historical records

• auditable independently

Given the same inputs, settlement produces the same result.

There is no discretionary intervention at settlement time.

Failure & Edge Cases

If the underlying market:

• is canceled

• fails to resolve

• resolves as invalid

Variance Markets mirrors that state. Variance-based positions associated with that market follow predefined fallback rules (e.g. cancellation or neutral settlement), identical in spirit to the base market.

Variance Markets does not introduce new failure modes beyond those of the underlying market.