Event Card Synthetic Bear Position — Specification
1. Collateralization
Every Bull and Bear position is fully funded at entry — no leverage. A Bull's full purchase amount and a Bear's full collateral are debited from the user's USDC balance before the position exists. Collateral is held in the platform's pooled clearing account (standard double-entry internal ledger), not per-position escrow. Aggregate Bull and Bear exposure per card is tracked in dedicated per-card counters that are updated atomically.
2. Maximum loss
Strictly limited to the amount committed. Bear PnL is hard-clamped in code to ±collateral, so payout can never go below zero. A Bull's worst case is the index going to zero (loss = 100% of the purchase, never more). When the optional NAV-trade fee is enabled (see §10), it is charged separately and can add a small cost on top of the clamped PnL — it can never create a negative balance or a claim beyond your stake.
3. Payout formula
Linear in the card index, path-independent (only entry and exit index matter — no funding, no decay, no intermediate-path effects):
Bear: pnl = collateral × (entry_index − exit_index) / entry_index, clamped to [−collateral, +collateral]
payout = collateral + pnl
No multipliers, no leverage. Note the Bear cap: maximum gain is +100% of collateral even if the index goes to zero.
4. Counterparty model
There is no matched order book. Both sides face the platform's clearing pool. Bear open interest is hard-capped so it can never exceed the card's Bull notional — enforced by an atomic, race-free database constraint at order time. Bear profits are funded by the clearing pool, which is replenished by trading fees, realized Bull losses, and collateral from losing Bears.
5. Unmatched exposure
When Bull open interest exceeds Bear open interest, the residual Bull exposure is not hedged by a matched counterparty; Bulls hold a claim on the pooled clearing account (a pooled clearing design, closer to pari-mutuel than to a matched book). The Bear-side cap (Bear ≤ Bull) exists precisely so the synthetic short side can never outgrow the long interest standing behind it.
6. Index pricing (NAV)
The card index is a fixed-weight basket: index(t) = base × Σ wᵢ · priceᵢ(t)/priceᵢ(t₀)
- Update cadence: event-driven from live exchange price streams with a 3-second debounce, a 45-second refresh for stock legs, and a 30-second safety-net recompute.
- Stale/unavailable prices: the index publishes only at (effectively) full price coverage; on partial coverage the last fully-covered value is carried forward — never interpolated or fabricated. Trade entry/exit pricing enforces a 30-second staleness cap.
- Sanity band: any leg whose price ratio moves outside 0.1×–10× of its base is treated as unpriced and dropped from that pass (protects against corrupt feeds).
- Stock market hours: opening trades on cards with stock legs is gated by US market hours unless the leg is a tokenized 24/7 stock.
- Mixed stock/crypto baskets: supported; each leg prices from its own feed and the coverage/staleness rules above apply per leg.
7. Settlement and closing
Positions close any time at the current index while the card is live: Bulls support partial closes; Bears close in full. Closing is a ledger settlement (a redemption at index), not a CLOB sale. Cards with a defined end date auto-settle at the final index when trading closes; perpetual cards have no auto-settlement event.
8. Margin and liquidation
None. All positions are fully prepaid; there is no margin, no leverage, and no liquidation mechanism on Event Card Bull/Bear positions. (Leveraged shorts with margin and liquidation live on your own connected exchange account — see Real Shorts.)
9. Insolvency protection
Payouts draw on the clearing pool first, then an insurance pool. If both cannot cover a payout in full, the shortfall is never silently dropped: available funds are paid, the remainder is enqueued as a deferred credit and retried automatically until liquidity arrives, and the system fails loud rather than fabricating a balance. There is no socialized-loss haircut of other users' positions.
10. Fees and slippage
Trade size limits: $1 minimum, $100,000 maximum per trade. For ledger-settled (EVCDX) trades an optional NAV-trade fee exists (currently disabled; when enabled it is 0.20% and is charged as a separate line item — displayed PnL is gross of that fee). For cards that execute a real on-chain basket, execution cost is the DEX swap slippage and gas embedded in the fills; there is no hidden platform markup on top.
11. On-chain withdrawal (EVCDX / Rally tokens)
Bull/Bear positions themselves are ledger positions and are not withdrawable as tokens. EVCDX ERC-20 tokens exist through a separate authorized-participant creation/redemption flow: each token represents a claim at the card's published NAV per token (index-linked), minted and redeemed on Ethereum mainnet against verifiable backing. Rally Cards additionally support a holder redemption path that pays USDC at NAV from the card's own segregated payout wallet. If you hold a position and want out, you close/redeem for USDC and withdraw USDC on-chain via the standard withdrawal flow.
12. Audit trail
Every step is linkable end-to-end in platform records: the card's index history (timestamped index snapshots with coverage), your position record (entry index, size/collateral, status, realized PnL, exit index), per-trade execution records (venue, amounts, transaction hashes where on-chain), every ledger movement (double-entry, referenced to the position), token supply/NAV records for EVCDX tokens, and the mint/redeem audit trail with on-chain transaction hashes for authorized-participant flows. Support can produce this chain for any position on request.