Axient: Debt-Free Finality for Leveraged Binary Event Markets

Battle Count: 50

The paper is highly relevant to prediction-market trading, event-contract risk management, and DeFi margin lending, but less directly applicable to traditional quantitative trading (equities, FX, futures). It addresses a specific structural problem: leveraged positions on bounded-support binary event claims where the underlying may become non-tradable before oracle finality. The robust execution framework, shared-book liquidity discipline, and debt-free finality mechanism are transferable concepts for any venue with asynchronous settlement and bounded underlyings. The optimal execution and robust optimization components connect to broader quant-trading literature (Almgren-Chriss, Bertsimas-Lo). However, the paper does not address alpha generation, statistical arbitrage, or traditional portfolio construction. Its primary audience is prediction-market operators, DeFi protocol designers, and event-derivative risk managers rather than conventional quant traders.

The mechanism requires: (1) a controlled signer or venue-recognized margin vault with delegated liquidation authority and collateral non-escape enforcement; (2) an exact-decimal double-entry ledger with idempotent settlement posting; (3) a robust risk engine computing lower settled-proceeds envelopes over registered uncertainty sets; (4) aggregate shared-book capacity management with deterministic priority ordering; (5) market-data reconstruction with sequence-numbered book streams and staleness detection; (6) lifecycle workers for settlement, finality, dispute, and redemption state transitions; (7) reserve waterfall and pro-rata allocation logic; (8) adversarial book transformation testing; and (9) a trust-minimization ladder from T0 (simulator) to T4 (multi-venue). The reference architecture is a modular monolith with PostgreSQL, Redis, TypeScript workers, and chain clients. The hardest parts are enforceable execution authority (Assumption 3.5), collateral non-escape (Assumption 3.6), and venue-recognized margin vaults (Tier T3), which require venue-side contract changes. The mathematical core is tractable but the operational and trust-boundary engineering is substantial.

The paper requires no external dataset. A deterministic verifier (Python, Decimal precision 50) evaluates 249 named algebraic checks on finite step books, partial fills, settlement delays, robust envelopes, adversarial book transformations, shared-book liquidation, reserve allocation, zero liquidity, and payout vectors in {0, 1/2, 1}. All scenario inputs are author-specified deterministic registries serialized as decimal strings. The release package includes code, CSV/JSON outputs, verification report, LaTeX source, and SHA-256 manifests. Reproduction commands are provided. No random seeds or network requests are used. The paper explicitly separates pathwise invariants, robust-set guarantees, scenario-conditional statements, implementation assumptions, and unvalidated deployment claims.