Instrument Layer

Alpha Passes, Futures, and Indices

The scoring mechanism produces a verifiable, on-chain reputation signal. The instrument layer transforms that signal into a set of tradeable financial products with continuous price discovery. Three instrument classes are defined.

Alpha Passes

An Alpha Pass P(x, n) grants the holder access to the next n predictions from predictor x, where n ∈ ℕ⁺ is set by the predictor at issuance. The pass is implemented as an ERC-1155 token with the following tokenId encoding:

tokenId = uint256(x) << 128 | uint128(epoch)

Passes are issued by predictors and sold on the primary market at a price determined by the predictor, subject to a floor derived from the predictor's Notch Score. Passes are freely transferable and tradeable on a secondary market operated by the protocol's exchange contract.

The protocol collects a fee of φ_p = 2.5% on every primary and secondary market pass transaction.

Pass holders receive predictions via an access-gated API. At reveal time, the prediction is published to pass holders before the public. After resolution, the prediction becomes public for scoring verification. This creates a temporal information advantage.

Alpha Futures

Alpha Futures are binary options on the trajectory of a predictor's Notch Score. They enable the market to price the sustainability of a predictor's edge — not merely whether a single prediction is correct, but whether a predictor's overall quality will increase or decrease over a defined period.

An Alpha Future F(x, T, θ) is a binary contract that pays 1 unit if predictor x's Notch Score at time T exceeds threshold θ, and 0 otherwise:

Payoff(F) = 1 if NS(x, T) > θ, else 0

Resolution is deterministic: the on-chain Notch Score is queried at time T, and the contract settles automatically. No oracle is required beyond the score itself.

Alpha Indices

Alpha Indices provide diversified exposure to the aggregate prediction quality of a ranked cohort of predictors.

An Alpha Index I_k bundles the top k predictors by Notch Score, weighted proportionally:

w_j = NS_j / Σ NS_i, for j = 1, ..., k

The index rebalances at fixed epochs (initially monthly). A holder of one index share is entitled to receive the weighted average pass output of all constituent predictors.

The protocol charges a management fee of φ_m = 0.5% annually on capital following index signals. The index solves the liquidity fragmentation problem — a consumer who wants broad exposure to verified prediction quality need not evaluate individual predictors.

Cross-Protocol Composability

The Notch Score is designed as a composable on-chain primitive. Any smart contract on the deployment chain can query a predictor's score through a minimal interface:

interface INotchScore {
    function getScore(address predictor) external view returns (uint256);
    function getCalibration(address predictor) external view returns (uint256);
    function getPredictionCount(address predictor) external view returns (uint256);
    function isActive(address predictor) external view returns (bool);
}

This enables external applications: lending protocols that offer preferential rates to well-calibrated predictors, trading platforms that surface Notch Scores on user profiles, or governance systems that weight votes by demonstrated forecasting ability.