System overview

The problem

A prediction market lets people trade on a question such as “Will the fictional Aurora spacecraft launch before 31 December 2030?” Its shares are worth something only after someone decides what actually happened. That decision is the weak point: whoever controls it controls the money.

Zoltar and Statoblast make the decision expensive to corrupt in two ways. Anyone who reports an outcome must stake a token behind it, and the contracts settle in favour of the outcome with the most stake behind it. Reporters whose outcome loses forfeit REP, so backing an answer the rest of the market will not support is costly. Whether that pressure keeps reports honest depends on the participation assumptions in the security model. And when reporters cannot agree, the system does not pick a side: it splits into parallel ledgers, one per possible answer, and lets the market decide which ledger stays valuable. A dishonest majority can win a vote, but it cannot stop honest participants from walking away with a copy of the books.

Three words you will see everywhere

REP

The Reputation token. Holding REP lets you report outcomes and underwrite markets. It is also what you risk: a reporter loses REP when the outcome they supported loses, and a vault owner loses REP when their vault, the account inside a SecurityPool that holds their backing, is liquidated.

Universe

A ledger that can branch. Markets and REP balances belong to a particular universe. Questions are registered globally, so the same question can have markets in multiple universes. When reporters split irreconcilably, the universe forks into children, one per possible answer, each with its own REP.

SecurityPool

The contract for one market in one universe. It holds the ETH that backs the market's shares and keeps the books on who underwrites the market, who is disputing its outcome, and who is owed what.

Four components

Zoltar

The ledger. It records questions, universes, REP, and forks. It never judges which answer is true.

Statoblast core

The market. It deploys one SecurityPool per question and universe, mints and redeems shares, settles ordinary disputes locally, and moves markets into child universes after a fork.

Statoblast Trading

An exchange for Statoblast shares. It is one of possibly many; it neither creates nor resolves markets.

OpenOracle

A price feed. It supplies a contestable REP/ETH exchange rate whenever the protocol must check that REP still covers ETH obligations. It has no say in market outcomes.

One market, start to finish

Alice registers the Aurora question in Zoltar and deploys its SecurityPool. Vault owners lock REP in vaults, the accounts that provide economic backing for the market. Traders send ETH to the pool and receive complete sets: one Yes share, one No share, and one Invalid share, the outcome used when the question cannot be validly resolved, for each unit of collateral at the pool's current rate. They trade those shares however they like. When the launch deadline passes, reporting begins.

Reporters stake REP behind an answer in the pool's Escalation Game, a dispute round whose deadline moves later as the contested amount grows. When the deadline finally passes, the market resolves if exactly one answer holds more REP than every other, and winning shares redeem the pool's ETH. Usually that is the end of the story.

If two answers each attract so much REP that neither can be called the winner, the pool forks: its universe splits into an Invalid, a Yes, and a No child. Vault owners choose a child for their vault. Shareholders can materialize their share claims in multiple children. ETH is not duplicated: each child receives only what migrates to it, and a child that comes up short holds a Truth Auction, selling its own REP for ETH to close the gap. Forks and migration follows both paths in detail, and what a fork does and does not promise is the single most important thing to understand about these protocols.