Notch Protocol
A Cryptographic Framework for Verifiable Prediction Scoring and Alpha Commoditization
Notch is a permissionless protocol for the cryptographic commitment, verification, and scoring of price predictions on Ethereum Layer 2. The protocol implements a commit-reveal scheme in which a predictor submits a hashed prediction to a smart contract, reveals the prediction parameters after a mandatory delay, and receives an automated accuracy score upon resolution by an oracle price feed.
Scoring uses the Brier Score — a strictly proper scoring rule with the property that expected score is uniquely optimized when stated confidence equals true belief, making systematic misreporting irrational under all strategies.
Four Properties
No existing protocol combines all four:
- Cryptographic commitment. Predictions are hashed and recorded on-chain before the predicted event occurs. The commitment is binding and hiding.
- Calibration-aware scoring. Accuracy is evaluated using a strictly proper scoring rule that rewards not only correctness but also the quality of stated confidence.
- Persistent on-chain reputation. Scores accumulate over time into a composite metric that is public, queryable by any smart contract, and resistant to Sybil strategies.
- Financial instruments on verified skill. The score serves as the underlying asset for tokenized access rights, derivative contracts, and index products.
Three Instruments
Alpha Passes
Tokenized access rights to a predictor's future output. ERC-1155 tokens traded on the protocol's native marketplace.
Alpha Futures
Binary options on the trajectory of a predictor's Notch Score — pricing the sustainability of a predictor's edge.
Alpha Indices
Bundled exposure to the aggregate prediction quality of a ranked cohort of predictors. The S&P 500 for trading intelligence.
Deployment
Designed for Arbitrum One, with a complete prediction cycle costing approximately $0.01–$0.03 in gas. Chain-agnostic contracts with no Arbitrum-specific precompiles.