Resolution when the claims are already accrued

Liquidity is half of permissionless. The other half is who says what happened.

The mechanism proposes nothing new here — staked resolution bonds with slashing, escalation games, and dispute juries are the deployed designs of Augur, UMA and Kleros, and have been in production for years. But vesting changes the resolver's incentive landscape in three specific ways, two of them for the worse, and a venue that ships the settlement rule without shipping the three defences has built something more attackable than the classic pool it replaced.

Naming those three is the point of this article.

1. Delay farming

The incentive. Accrued claims are monotone — nothing ever decrements them. So a resolver who holds a winning position has a weakly dominant incentive to delay: every extra dollar of opposing flow vests to them, at no risk, for as long as the market stays open.

Why it is new. In a classic parimutuel, delay dilutes the winner — more money joins the winning book and everyone's multiple falls. The incentive points the other way. Here it points at the resolver, and it points hard.

The fix, for known-schedule markets. Mechanical and complete:

Fix the resolution timestamp at creation, freeze the accumulator there, and let the resolution transaction land whenever it lands.

Entries with a vintage after the freeze are refused in full. That is not a lock window — it is the market ending at its declared time, and P4's no-lock corollary is about markets before their declared end. Once the accumulator is frozen, latency has zero payoff impact, and the incentive is gone rather than policed.

The scope is real, and the paper says so. This fix is exact only for markets whose resolution time is knowable at creation. For event-driven markets it is not, and the freeze must trigger at:

the earliest of a fixed outside date and the first bonded resolution attestation

so the resolver can accelerate the freeze but never extend it. Between attestation and finality the accumulator is frozen and post-freeze entries are refused.

An implementation that instead accepts post-freeze entries has broken P1, because a frozen accumulator orphans their vesting. This is not a policy preference; it is a conservation violation.

And the attestation trigger is itself a lever that must be priced. Any bonded party can halt entry by attesting. So a defeated attestation must un-freeze the market and slash the attestor's bond, sized at least to the blocking value of the halt.

The residual honesty note, which the paper states rather than buries: event-driven markets do close entry for the length of a challenge window. That is a bounded reintroduction of the lock, and P4's corollary should be read as excluding it.

2. Stall-into-void

The auto-refund safety net is itself an attack surface, and the two must be designed together.

The incentive. A resolver on the losing side of a large vested payout has a strictly profitable strategy of never resolving. At the refund deadline they recover their full losing principal, and every counterparty's accrued claim evaporates.

Why vesting makes it sharper. Accrued claims are public. So the staller knows exactly what refusing to resolve saves them, down to the cent, and can attempt to extort large vested winners inside the refund window with a precise number in hand. In a classic pool the equivalent figure does not exist until settlement.

Three rules close it, and they compose without contradiction.

First — a timeout forfeits the resolver's seed. The seed legs' principal is a branch-independent amount, so forfeiting it funds the dispute layer and makes the stall cost 2× the seed, rising with whatever escalation has attached. The legs are extinguished as positions, and anything they would have collected beyond principal in a later resolution redistributes pro-rata to that branch's other winners — so the direction premium below never accrues to the seed or to the dispute layer as such.

(A fallback resolver who happens to hold positions in the declared branch still inherits a pro-rata slice like any other branch winner. That is the generic resolver-conflict the escalation game has to price, and it does not go away.)

Second — fallback resolution is permissionless, so anyone may post a bond to resolve after the timeout, with the standard escalation game. A void becomes the outcome of genuine ambiguity rather than a strategy.

But a timeout alone cannot distinguish a stall from honest ambiguity. So the venue must also provide a bonded void declaration through the same escalation path, letting an honest creator of a genuinely unresolvable market resolve to void without forfeiture. That is what makes the forfeiture price silence specifically, rather than punishing bad luck.

Third — "irrevocable" is conditional on the market resolving. In the void branch, every non-seed position refunds at its accepted principal, exactly. That conserves the pool and is pinned in the suite as case V4. The resolver-seed's refund is what the timeout redirects.

3. The direction premium

This is the subtle one, and the only one of the three that is unfixable in the mechanism and must be handled at the venue.

The incentive. A creator-resolver holds the seed on every outcome. So whichever way they resolve, they hold the winning leg. But the legs do not pay alike: the winning seed leg farms the losing flow, so the seed always pays more in the branch with more opposing volume — typically the minority outcome.

The gap across the two declarations is:

seed · ( A_w(T) − A_w'(T) )

a closed-form, publicly computable premium that the mechanism itself attaches to resolving toward one side. It is steeper here than in a classic pool because vintage 0 captures an outsized share of losing flow.

That is an uncomfortable property, and it is worth being clear about what it is: the mechanism computes, and publishes, a number that quantifies the bribe for resolving dishonestly in a particular direction.

Three mitigations, none of which removes it:

• Display the market's resolution premium live. It is two accumulator reads. A visible bribe is a priced bribe.
• Score creators on resolution direction against the pool-implied favourite over their history. A creator who repeatedly resolves toward the premium is legible.
• Make vintage 0 slashable on adverse escalation rulings. This is the one that changes the sign: it converts the premium from a bribe into a bond at risk.

A creator's seed is a better starting rung for the escalation path than reputation alone. It is only a rung.

The bond-scaling problem

One structural issue applies to all three, and it is the kind of thing that is fine in month one and dangerous in month twelve.

The bond is fixed at creation. What it secures grows with the market. The behavioural study's $100 seed against its $2,254 mean accepted pool is 4.4% — and the ratio only falls as a market succeeds. Your most valuable markets are your least-bonded markets.

The requirement:

Escalation bonds must scale with the disputed declared-branch payout.

And here the mechanism actually helps, which is worth claiming: §6 makes that payout O(1)-computable per position. The dispute layer can price exactly what is at stake, rather than guessing from volume. That is a concrete advantage over classic pools, where the equivalent figure requires a settlement pass.

What the venue owes, operationally

None of this is mechanism. All of it is required before permissionless creation:

• A public creator history — markets resolved, volume settled, disputes, time-to-resolution — surfaced via API so agents can price resolution risk before staking. Agents cannot inspect a reputation they cannot fetch.
• Auto-refund for unresolved markets, with the stall defences above attached.
• A winning outcome with no backers voids.
• Track-record metrics that exclude self-vested flow.

That last one is not optional hygiene, and the reason is P5. A participant who dominates both books of a market can print wash volume at near-zero mechanism cost — the donation is (1−f)-scaled in their own share of the opposing book, so for a book-dominant party the mechanism-level cost falls toward zero and only your fee binds.

So:

Track-record metrics must exclude self-vested flow — flow whose vesting lands on positions of the same funding cluster, which is identifiable from the public log — and weight bonded, aged, distinct counterparties instead.

Distinct-counterparty counting alone is sybil-purchasable. Volume alone is worse. If your creator ranking runs on handle, it can be bought.

The summary

A perfect settlement identity resolved by a liar pays the liar's friends exactly. That is the whole reason this article is longer than it looks like it should be.

Next: MEV, vintages, and the price of one block.