# Event Contract Real-Time Index Methodology

# Overview

The recent growth in new event contract exchanges, interest and volume in trading event contracts, and exponential growth in new contracts being listed, Adjacent Markets has developed standardized real-time indices and reference rates. This document covers Real-Time Indices.

# Definitions

Accepted Quote Asset: A quote or collateral asset approved as a 1:1 substitute for USD. Accepted Quote Assets are listed in Section 3.

AIC: The Adjacent Index Committee, or its successor.

Calculation Agent: The party responsible for retrieving venue data and calculating the rate.

Calculation Day: Any day on which this Reference Rate is published.

Constituent Venue: A trading venue identified as eligible in the rate specification. A venue’s quote asset must be an Accepted Quote Asset. Eligibility does not require a venue to provide a usable order book at every Retrieval Time.

Effective Time (`T`): The designated time at which the real-time index is calculated and published.

Identity: A published binding contracts across venues are economically equivalent.

Numeraire: USD. Accepted Quote Assets are treated solely as 1:1 substitutes for USD.

Point: One unit on the published 0-100 scale. One Point equals 0.01 in the `[0, 1]` domain. All thresholds in this methodology are measured in Points.

Primary Venue: The Constituent Venue designated in the rate specification as the reference venue for the basis screen.

Relevant Contract: The single Yes contract, or named-outcome contract, designated for an economic event.

Retrieval Time: The Calculation Agent clock time at which a Relevant Order Book snapshot is retrieved.

Void: A cancelled contract. A Void is neither 0 nor 1. AIC stops publication or marks the rate as void.

# Methodology and Rules

Adjacent Markets Real-Time Indices are calculated from order-book midpoints for economically equivalent contracts on Constituent Venues. Venues are screened and accepted by the AIC based on their regulatory status, accepted quote assets, and market breadth and activity.

## Venues and Identity

Event contracts are not fungible between and across exchanges, additionally there is little standardization to market structure, settlement rules, and listing cadence. Due to this Adjacent Markets accepts a venue and identifies economically equivalent markets on, but not limited to, the following criteria:

### Venues

#### Accepted Quote Assets

Constituent Venues do not all quote in cash dollars. For example, Kalshi and Polymarket US settle in USD but Polymarket international collateral is pUSD, a 1:1 wrapper of native USDC.

The AIC maintains a list of accepted quote assets.

| Asset | 1:1 with USD | Status |
| --- | --- | --- |
| USD | Yes | Accepted |
| USDC | Yes, if 1:1 redeemable through the issuer | Accepted |
| pUSD | Yes, via USDC | Accepted |
| USDC.e | Yes | Accepted |
| USDT | No | Not accepted |

1. Convertibility needs to be 1:1 with reserves published transparently.
2. Peg break, redemption halt, or wrapping halt is a Market Failure Event subject to AIC review.

#### Reasonably Defined Settlement Rules

An accepted venue should either be CFTC regulated or, if not regulated, have clearly defined and consistently applied settlement rules. At a minimum, the venue should publish settlement procedures, dispute-resolution and appeals processes, and objective criteria for handling edge cases (for example, data-source outages, market halts, or late amendments to the underlying event definition). The venue should also demonstrate a track record of settling comparable markets over time, including a documented history of how disputes were resolved, so that the AIC can evaluate precedent and the reliability of outcomes.

### Identity

Identity is a published binding that venue contracts are economically equivalent. Contracts are determined equivalent according, but not limited to the following guidelines:

- Contracts are economically equivalent only when they reference the same economic event and the same designated claim.
- Equivalence is a precondition to blending. If a contract is amended, or a venue changes its rule text such that equivalence breaks, stop blending that venue and report to AIC.
- Titles, descriptions, and similarity scores can screen candidates, but equivalence must be justified by the rule text (event definition, settlement source, finality, timing, and void path).
- The designated contract must be explicit (one Yes / one named outcome). The No sibling is not a second source, and `1 - p` inversion is not permitted.

Example

Contracts on the Republican party winning the 2028 election are listed below.

| Venue | Contract | Settlement | Settlement time | Source |
| --- | --- | --- | --- | --- |
| Kalshi | `KXPRESPARTY-2028-R` | A Republican is inaugurated for the term beginning 20 Jan 2029. | Inauguration January 20, 2029 | Office of the Presidency |
| Polymarket | `which-party-wins-2028-us-presidential-election` | Race is called for the same party by AP, Fox News, and NBC; if not called by inauguration day, who is inaugurated. | Inauguration January 20, 2029 | AP, Fox News, NBC; else inauguration |
| Polymarket US | `ewc-usp-party-2028-11-07-rep` | Republican nominee wins by electoral-college majority; if none, first formally selected (non-acting) under the constitutional process. | “Usually within 25 minutes of closing” with the close date “By end of Nov 7, 2028” | Relevant government authorities |

The table below illustrates contracts that can look similar enough to belong in one “CPI” rate family, but are not economically equivalent.

| Venue | Contract | Settlement (what it measures) | Not economically equivalent because |
| --- | --- | --- | --- |
| Kalshi | `KXCPI-26AUG` | Headline CPI MoM (Aug 2026) | Headline vs core, and MoM vs YoY are different economic claims. |
| Polymarket | `core-cpi-yoy-august-2026` | Core CPI YoY (Aug 2026) | Different CPI series and measurement window. |
| Polymarket US | (Example) Core CPI MoM (Aug 2026) | Core CPI MoM (Aug 2026) | Even if MoM matches, core is not headline. Same release date is not equivalence. |

## Calculation

Calculation steps are as follows:

1. Retrieve: At Retrieval Time, retrieve the Relevant Order Book for the Relevant Contract from each Constituent Venue. Aggregate orders at identical prices before applying the screens.

2. Drop erroneous books: Drop a venue’s Relevant Order Book if the payload is non-numeric or unparsable, either side is missing, the best bid exceeds the best ask, the bid-ask spread exceeds the potentially erroneous band, the snapshot is older than the Retrieval Lag Threshold relative to the Calculation Agent clock, any price is outside `[0, 1]`, or any size is `<= 0`. A locked book, where the best bid equals the best ask, is not erroneous.

3. Equivalence check: Confirm all included venue contracts still satisfy the equivalence guidelines above, including event definition, settlement source and finality, market structure, timing, and void rules. If a change breaks equivalence, stop including that venue and report to AIC.

4. Calculate venue midpoints: For each remaining Constituent Venue `v`, calculate the order-book midpoint from its best bid `b_v` and best ask `a_v`:

```
m_v = (b_v + a_v) / 2
```

5. Basis screen: Compare each venue midpoint with the Primary Venue midpoint. Drop a venue if the absolute difference exceeds the basis threshold specified for the rate. If no usable Primary Venue order book remains, there is a calculation failure.

6. Aggregate: Let `V_T` be the set of venues that remain after screening. Calculate the real-time index as the equally weighted arithmetic mean of their midpoints, expressed on the 0–100 scale:

```
RR_T = 100 * (1 / n) * (m_1 + m_2 + ... + m_n)
```

where `n` is the number of venues in `V_T`, and each `m_v` is that venue’s midpoint.

7. Publish: Apply the rounding convention specified for the rate and publish `RR_T`. If no usable Relevant Order Book remains after screening, there is a calculation failure.

## Worked Example

- Venue A has a best bid of 0.42 and best ask of 0.46, producing a midpoint of 0.44.
- Venue B has a best bid of 0.43 and best ask of 0.45, producing a midpoint of 0.44.
- Both venues pass the book, equivalence, and basis screens.
- The equally weighted mean midpoint is 0.44.
- Publish `RR_T = 44` Points, subject to the rate’s rounding convention.

# Contingency Rules

- Missing venue book: A Constituent Venue with no usable Relevant Order Book at Retrieval Time contributes nothing to the calculation.
- Erroneous books: Drop books that fail the erroneous-book rules in Step 2.
- Primary Venue unavailable: If no usable Primary Venue order book remains after screening, treat the result as a calculation failure.
- Economic Equivalence break: If venue contracts cease to be economically equivalent, stop including the non-equivalent venue and report to AIC

# Version History

- v0.1 (2026-09-02): Initial draft