modules

The Signal Vault is the brain of no-loss prediction markets. Its purpose is to incentivize users to share their predictions and to aggregate this market intelligence into a single trading signal for the Asset Vault.

PSM holders can stake their tokens in the Signal Vault and then make a directional prediction (up or down) on the Vault's base asset price (e.g. ETH) for the upcoming epoch.

User predictions serve as sentiment measure which is processed by an algorithm to arrive at a trading signal. This signal is relevant for the Asset Vault.

Users who predicted correctly share the epoch reward. The reward must be claimed in the following epoch or else is returned to the vault. Posting predictions, staking, or unstaking automatically claim pending rewards. Epoch rewards are initially sponsored by the project's treasury but are regenerated by protocol activity to ensure sustainability. (read more in the Asset Vault chapter)

During the settlement process of each epoch, the Signal Vault receives and stores the settlement price from an oracle. This is the reference price for trading activity in the Asset Vault and determines the winning prediction from the past epoch.

The Signal Vault takes a small deposit fee of 1% to prevent manipulation attempts of the signal logic. The deposit fee is automatically sent to the PSM/ETH liquidity pool on Uniswap V2.

Bob stakes 10M PSM and predicts the price of ETH to go up next week. There are other 90M PSM staked, so Bob owns just 10% of the total staked capital. Alice also staked 10M PSM and made the same prediction as Bob. All other stakers (80M PSM) predicted the price of ETH to go down instead. In this example, the epoch reward is a fixed amount of 5M PSM.

Arriving at settlement, the price of ETH did indeed go up during the epoch. Bob and Alice share the 5M PSM equally (10M/20M = 50%). Alice and Bob each receive 2.5M PSM from the Signal Vault while the other 80M PSM of remaining stakers didn't lose and can try again next epoch.