# Top 5 Team Defenses NTI Methodology

**Adjacent Markets, Inc.**
Version 1.0
Adjacent uses AI and agents to assist with methodology development under [Adjacent’s AI Disclosure Policy](https://cdn.sanity.io/files/ddr9slt2/production/06cfe0b40d87e2291b313451461b10a0b9f37844.pdf). Humans remain responsible for themes, product decisions, and publication readiness.

## Table of Contents

- [1. Executive Summary](#1-executive-summary)
- [2. Index Overview](#2-index-overview)
  - [2.1 Objective](#21-objective)
  - [2.2 Index Name and Identifier](#22-index-name-and-identifier)
  - [2.3 Design Principles](#23-design-principles)
  - [2.4 Target Users and Use Cases](#24-target-users-and-use-cases)
- [3. Universe Definition](#3-universe-definition)
  - [3.1 Identity](#31-identity)
  - [3.2 Ranking season and mapping](#32-ranking-season-and-mapping)
  - [3.3 Admission tests (mechanical)](#33-admission-tests-mechanical)
  - [3.4 Constituent contracts](#34-constituent-contracts)
  - [3.5 No mid-calendar replacement](#35-no-mid-calendar-replacement)
- [4. Data Sources](#4-data-sources)
  - [4.1 Primary data](#41-primary-data)
  - [4.2 Price convention](#42-price-convention)
  - [4.3 Official resolution](#43-official-resolution)
  - [4.4 The rate](#44-the-rate)
  - [4.5 Published values](#45-published-values)
- [5. Weighting Methodology](#5-weighting-methodology)
  - [5.1 Equal dollar](#51-equal-dollar)
  - [5.2 Quantity setting](#52-quantity-setting)
  - [5.3 No mid-window rebalance](#53-no-mid-window-rebalance)
- [6. Index Calculation](#6-index-calculation)
  - [6.1 Inception, reconstitution, and vintage freeze](#61-inception-reconstitution-and-vintage-freeze)
  - [6.2 Formula by reference](#62-formula-by-reference)
  - [6.3 Intraday marks](#63-intraday-marks)
  - [6.4 Reconstitution pricing window](#64-reconstitution-pricing-window)
  - [6.5 Resolution treatment](#65-resolution-treatment)
  - [6.6 Floor, 0.00, and upside](#66-floor-000-and-upside)
  - [6.7 Performance convention and rounding](#67-performance-convention-and-rounding)
- [7. Index Maintenance](#7-index-maintenance)
  - [7.1 Update and reconstitution schedule](#71-update-and-reconstitution-schedule)
  - [7.2 Regular reconstitution](#72-regular-reconstitution)
  - [7.3 Successor and settlement](#73-successor-and-settlement)
  - [7.4 Halt and zero](#74-halt-and-zero)
  - [7.5 Market disruptions and data failures](#75-market-disruptions-and-data-failures)
  - [7.6 Voids, amendments, and corrections](#76-voids-amendments-and-corrections)
  - [7.7 Methodology review](#77-methodology-review)
  - [7.8 Exclusion](#78-exclusion)
- [8. Governance](#8-governance)
  - [8.1 Index Sponsor and Calculation Agent](#81-index-sponsor-and-calculation-agent)
  - [8.2 Adjacent Index Committee](#82-adjacent-index-committee)
  - [8.3 Meeting Schedule](#83-meeting-schedule)
  - [8.4 Methodology Changes](#84-methodology-changes)
  - [8.5 Conflicts of Interest](#85-conflicts-of-interest)
- [9. Risk Factors and Limitations](#9-risk-factors-and-limitations)
  - [9.1 Zero and reconstitution-gap risk](#91-zero-and-reconstitution-gap-risk)
  - [9.2 Marking and liquidity risk](#92-marking-and-liquidity-risk)
  - [9.3 Implementation cost and uninvestability risk](#93-implementation-cost-and-uninvestability-risk)
  - [9.4 Resolution and contract risk](#94-resolution-and-contract-risk)
  - [9.5 Overlay and n < 5 concentration](#95-overlay-and-n-5-concentration)
  - [9.6 Defensive-ranking overlay risk](#96-defensive-ranking-overlay-risk)
- [10. Changelog](#10-changelog)
- [11. Approvals](#11-approvals)
- [12. Legal Notices and Disclaimers](#12-legal-notices-and-disclaimers)

## 1. Executive Summary

Top 5 Team Defenses NTI (DEF5NTI) is an equal-dollar, rebased Total Return index of the current-season NTI books of NFL teams that posted the prior regular season’s lowest official points allowed per game. It is built for a thematic investor who wants that ranking as one series. Membership is a ranking overlay on NTI. Official points allowed per game is the admission sort, not a constituent.
DEF5NTI is published in two forms:
- **Live:** DEF5NTI is the current season’s index. After inception, it resets to 1,000.00 at each annual NTI reconstitution date (rebased).
- **Vintage:** DEF5NTI.YYYY is that season’s terminal value. A vintage is not reset to 1,000.00.
The first vintage year is 2026 (ranking season 2025), unless the designated first official publication slips past that vintage (Section 6.1). The published name does not include “prior season”; that is the standing admission rule (Section 3.2). First official publication may be after that vintage’s NTI reconstitution; if so, live does not reset to 1,000.00 on the launch day. The index is uninvestable. Products may reference it through other instruments.

---

## 2. Index Overview

### 2.1 Objective

Each DEF5NTI season vintage measures the percentage total return of an equal-dollar portfolio of the admitted teams’ NTI event-contract books. Membership and `Q` for vintage YYYY are those of NTI’s reconstitution for that season. After inception, the live series starts at 1,000.00 on each annual NTI reconstitution date. The first official publication date may be after that vintage’s NTI reconstitution (Section 6.1); if so, live continues the reconstructed NAV and does not reprint 1,000.00 on the launch day. Completed vintages remain as historical series. Live values are not a continuous multi-year total-return series.
Contract quantities are set at the NTI reconstitution for that vintage and held. NAV changes only with constituent rates, including when a rate publishes a terminal value. There is no intra-season rebalance and no mid-calendar successor.

### 2.2 Index Name and Identifier

- **Index name:** Top 5 Team Defenses NTI
- **Short name:** DEF5NTI
- **Live ticker:** DEF5NTI
- **Vintage ticker:** DEF5NTI.YYYY (YYYY is the season start year; e.g. DEF5NTI.2026 for 2026–27)
- **Membership overlay:** the immediately prior NFL regular season (YYYY − 1). That ranking season is the admission rule. It is not part of the published index name (Section 3.2).
- **Index type:** Total Return (NAV-based), as defined in [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)
- **Weighting:** Equal dollar
- Reconstitution (membership and `Q`): NTI calendar for that vintage; rebased (`I_R = 1000.00`) at each annual NTI reconstitution
- **Base value at each annual reconstitution:** 1,000.00
- **First official publication / launch:** 12:00 p.m. Eastern Time on 11 September 2026, after the first vintage’s NTI reconstitution. Launch is not a second rebase (Section 6.1)
- **Target exposure:** Current-season NTI books of teams that posted the prior season’s lowest official points allowed per game (n ≤ 5)
- **Calculation unit:** Rates in `[0, 1]` and U.S. dollars for sleeve NAVs; index values are unitless

### 2.3 Design Principles

- **Ranking overlay.** For each vintage, membership is the prior regular season’s official points-allowed-per-game table, mapped onto current-season NTI books, with n ≤ 5 after stay-put, backfill, collision, and NTI exclusion (Section 3).
- **NTI overlay.** Each admitted team contributes its NTI four-sleeve book (Super Bowl, conference, division, two “at least N wins” YES contracts under NTI). DEF5NTI does not invent a new contract type.
- **Equal dollar across teams.** Admitted teams receive equal reconstitution dollars. Within each team, NTI’s 25% / 25% / 25% / 25% sleeve split applies. That split is a parameter of this index (§3 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)), not a new math type.
- **Stay-put mapping.** The ranking-season club maps to that franchise’s current-season NTI book. Coordinators, players, and scheme are not followed to a new club. Relocation or rebrand of a continuing franchise stays with that franchise under NTI. If a ranked franchise cannot reconstitute its NTI book, that name is vacated and the designated ranking table is walked in rank order until n = 5 distinct admitted teams or the table is exhausted. Same-franchise collision is not a vacancy (Section 3.3).
- **Ranking source is not the identity.** Membership is ranked by official regular-season **points allowed per game**. The ranking is an overlay only.
- **Live and vintage; rebased.** After inception, live reprints at 1,000.00 each season on the NTI reconstitution calendar. The reprint is a rebase, not a period return. If the first official publication is after the first vintage’s NTI reconstitution, that launch day is not a rebase.
- **0.00 is a continuing print.** A print of 0.00 is not, by itself, a halt (§9 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).
- **Exchange-agnostic.** Constituent inputs are the rates published under [Adjacent Event Contract Real-Time Rate Mathematics Methodology](https://cdn.sanity.io/files/ddr9slt2/production/a85890e68d25ac741caaf256b31134318feeb647.pdf). No named venue is the product.
- **Uninvestable; gross of costs.** The index is uninvestable and gross of costs.

### 2.4 Target Users and Use Cases

DEF5NTI is for a thematic investor who wants last season’s lowest official points allowed per game, expressed as those teams’ current-season NTI books, as one series. The series may also be used as a research or media reference, or as a benchmark for a product that holds the underlying event contracts or derivatives.

---

## 3. Universe Definition

### 3.1 Identity

**Economic events (blendable):** for each admitted team and season vintage, the same four NTI identities:
1. That team wins that vintage’s Super Bowl (YES resolves 1.00; otherwise 0.00), on official NFL Super Bowl outcome.
2. That team wins its conference that vintage (YES / 0.00), on official NFL conference championship outcome.
3. That team wins its division that vintage (YES / 0.00), on official NFL division outcome.
4. That team records at least N regular-season wins (YES / 0.00) for the two NTI 50% wrap strikes, on official NFL regular-season win total.
Contracts are **blendable** when they are the same economic event with nearly identical rules and resolution. Sameness across listings is established by CUSIP-like event-contract identifiers when published; until then, sameness is team + season + event type (Super Bowl / conference / division / at-least-N-wins). This methodology is exchange-agnostic.
The designated official prior-season defensive ranking is a **membership overlay only**. It is not a constituent and not an event-contract identity. Where a ranking was observed is not imported into the product definition.

### 3.2 Ranking season and mapping

For vintage YYYY (season start year), the ranking season is the immediately prior NFL regular season (YYYY − 1). That ranking season is the **admission rule** for who is in the book. It is not part of the published index name. Example: DEF5NTI.2026 uses the 2025 regular-season designated official defensive ranking, mapped onto those teams’ **2026** NTI books. This methodology does not list member teams by name.
Each ranked team maps to that NFL franchise’s **current-season** NTI book. Mapping is franchise stay-put: the ranking-season club is the same franchise’s vintage-YYYY NTI book under NTI (including relocation or rebrand of a continuing league member). Coordinators, players, and scheme are not followed to a new club’s NTI book. A dissolved or departed franchise is not kept. Player-prop contracts are out of scope. This overlay is not an offense ranking.

### 3.3 Admission tests (mechanical)

At reconstitution, a team is admitted if and only if all of the following hold:
1. **Designated official ranking.** The franchise appears on the official regular-season **points allowed per game** table of NFL team defenses for the ranking season, as published as of the start of the reconstitution pricing window (Section 6.4). Designated official sort: regular-season points allowed per game. A yards, DVOA, or season-total ranking is a different overlay.
2. **Sort.** Rank qualifying teams by regular-season points allowed per game, fewest first. That is the sort. A second defensive statistic is not used as a hidden sort. Season-total points allowed is not the rank when games played differ. An offensive ranking is not used.
3. **Cut-line ties.** If the designated source publishes a unique order at a cut that determines who is next on the table, use that order. If two or more teams share a rank at such a cut, use the source’s published tie-break if any. If the source is silent, break ties by earlier alphabetical team name (city, then nickname). This is a same-rank breaker only. It is not a new sort and does not switch the overlay to yards, DVOA, or season totals.
4. **Vacated.** As of the start of the reconstitution pricing window, if the ranked franchise is no longer an NFL member for the DEF5NTI vintage year, or cannot reconstitute its NTI four-sleeve book under the NTI methodology (including NTI deferred reconstitution), that franchise is **not** admitted.
5. **Backfill.** Walk the designated ranking-season defensive table in rank order. Admit a franchise only if it can reconstitute its NTI book at the pricing-window start (or under NTI deferred reconstitution in Section 6.1). Continue until n = 5 distinct admitted teams or the table is exhausted. A vacated name can bring in the sixth (or seventh, …) ranked defense **only if** that franchise can reconstitute under NTI.
6. **Collision.** If the designated source lists the same franchise more than once, that franchise appears **once**. A second name is not added because of a duplicate listing. Collision is not a vacancy.
7. **NTI book available.** The mapped franchise is an NFL team for the DEF5NTI vintage year and can reconstitute its NTI four-sleeve book under the NTI methodology (including NTI deferred reconstitution). If the franchise is excluded from NTI (no longer a league member, or required NTI contracts voided or delisted with no replacement), drop that franchise and keep walking the table (same as vacated).
8. **Admission rates.** Each required constituent contract has an admissible admission rate `P_(i,a) > 0` as defined in §5 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology). Contracts are binary (or use a published terminal or void rate under §8 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). Still open at admission unless the rate has already published a terminal value that NTI would use.
9. **n = 0.** If no team remains, that vintage is not launched. Partial team books are not created. If 1 ≤ n ≤ 5, equal-dollar across the n teams (Section 5).
Membership after reconstitution does not change until the next reconstitution calendar. An official restatement of the designated ranking after the pricing window does not change the live roster mid-calendar.

### 3.4 Constituent contracts

For each admitted team, DEF5NTI holds the NTI sleeves for that team and vintage, selected under NTI (Super Bowl YES; conference YES; division YES; two “at least N wins” YES that wrap 50% at NTI reconstitution, or NTI’s one-strike fallback). DEF5NTI does not re-pick win-total strikes separately.

### 3.5 No mid-calendar replacement

No intra-day or intra-season add or delete. No successor until the reconstitution calendar, including when next-season contracts are already listed. Membership is locked at the calendar. A coordinator move, player trade, relocation of a continuing franchise, or other offseason change after reconstitution does not replace the constituent mid-calendar. Settled contracts remain at the published terminal rate until the vintage is frozen (§8 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

---

## 4. Data Sources

### 4.1 Primary data

**Membership overlay:** official regular-season **points allowed per game** for NFL team defenses for the ranking season, and any published order or tie-break that source states, as of the start of the reconstitution pricing window (Section 3.3). A yards, DVOA, or season-total ranking is a different overlay.
**Rates:** each sleeve contract is marked at the rate published under [Adjacent Event Contract Real-Time Rate Mathematics Methodology](https://cdn.sanity.io/files/ddr9slt2/production/a85890e68d25ac741caaf256b31134318feeb647.pdf), as consumed in §4 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology). 60-second indicative values use the real-time rate. Official daily values and reconstitution admission use the published [Event Contract Reference Rate Methodology](https://cdn.sanity.io/files/ddr9slt2/production/5d9a472b54ceb98518c871be989fa5a39197af35.pdf). This methodology does not recompute a mid, last trade, one-sided quote, or second blend. It is exchange-agnostic and does not name a venue as the product.

### 4.2 Price convention

The approved mark `P_t` is the rate in `[0, 1]`. A published print of 63.00 is `P_t = 0.63`.

### 4.3 Official resolution

DEF5NTI uses the rates as published, including official settlement and void treatment from [Adjacent Event Contract Real-Time Rate Mathematics Methodology](https://cdn.sanity.io/files/ddr9slt2/production/a85890e68d25ac741caaf256b31134318feeb647.pdf) (§8 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). This methodology does not write 0.00 or 1.00 itself.

### 4.4 The rate

If no rate is available, DEF5NTI holds the last valid rate. If there is no valid rate at reconstitution, defer under Section 6.1. A halted contract uses the last valid rate; it does not, by itself, halt DEF5NTI (§9 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

### 4.5 Published values

Published values are the index calculated from the rates, not the rates themselves.
- Indicative values every 60 seconds using the rates on held `Q`.
- **Official daily value:** the index calculated from the rates in the official window 8:50 a.m. through 9:00 a.m. Eastern Time (same window as NTI).
- After a vintage reaches its official terminal value, including 0.00, that constant official daily value continues until the vintage is retired.
- Reconstructed / historical daily values (inception backfill only, if first official publication is after the NTI reconstitution): official-style, labeled not live (Section 6.1).

---

## 5. Weighting Methodology

### 5.1 Equal dollar

DEF5NTI is **equal dollar** as defined in §3 / §5 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology). `Σ W = 1,000.00` at reconstitution. Let n be the number of admitted teams after vacated franchise stay-put, walk-the-table backfill, collision, and NTI exclusion (Section 3.3). If the table is exhausted with 1 ≤ n ≤ 5, equal-dollar those n teams. If n = 0, that vintage is not launched (Section 3.3). Each team sleeve target is
```
W_team = 1000.00 / n
```
Within each team, NTI’s split applies to `W_(team)`:
| Team sleeve | Target (share of W_team) | Constituents |
| --- | --- | --- |
| Super Bowl | 25% | One YES |
| Conference | 25% | One YES |
| Division | 25% | One YES |
| Team total wins | 25% (12.5% each wrap strike; 25% if only one strike is listed under NTI) | NTI 50% wrap pair |
If n = 5, `W_(team)` = 200.00 and the Super Bowl / conference / division targets are 50.00 each; each wins wrap strike is 25.00. If n = 4, `W_(team)` = 250.00 and the NTI 25% split scales accordingly. There is no unallocated cash. Fractional `Q` is permitted.
This is name equal-dollar across teams and NTI’s sleeve split within a team — a parameter of this index, not a new mathematics type (§3 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

### 5.2 Quantity setting

`Q` is set at the NTI reconstitution for that vintage from equal-dollar as defined in §3 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology): `Q_i = W_i / P_(i,a)` using the rates at the reconstitution window (Section 6.4). `P_(i,a) ≤ 0` is not admissible. `Q` is held until the next NTI reconstitution calendar. A later first official publication does not reset `Q`. Admission of new quantities does not itself move the index.
Win-total strikes and the 50% wrap are those NTI selects for that team at the same reconstitution. DEF5NTI does not roll strikes if the median forecast later moves.

### 5.3 No mid-window rebalance

Quantities do not change when rates move or when contracts resolve. Settled names remain in NAV at the published terminal rate until the vintage is frozen (§8 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

---

## 6. Index Calculation

Calculation is **as defined in** [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology) (Total Return, equal dollar, rebased). This section does not rewrite that methodology.

### 6.1 Inception, reconstitution, and vintage freeze

**Underlying books and membership.** For vintage YYYY, membership (franchise stay-put, walk-the-table) and NTI sleeve `Q` for each admitted team are those of NTI’s reconstitution for that season, including NTI deferred reconstitution. DEF5NTI does not pick a different win-total wrap later. `I = 1000.00` and `NAV = 1000.00` at that NTI reconstitution because `W` is scaled that way (§5 / §12 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). That is the annual rebase. It is not a second rebase on a later launch day.
**NTI reconstitution calendar (membership and Q).** Membership and `Q` are set on the **same calendar as NTI**: 12:00 p.m. Eastern Time on the date published under NTI (inaugural: 12:00 p.m. Eastern Time on 3 September 2026), or NTI’s deferred 12:00 p.m. Eastern Time on the next Tuesday if a required NTI sleeve for an admitted team is not yet listed, and not after 12:00 p.m. Eastern Time on the day of the first regular-season game.
If an admitted team’s NTI book is delayed, DEF5NTI waits for that team through NTI’s last reconstitution opportunity. If that team is then excluded under NTI, drop it, set n to the remaining admitted teams, and equal-dollar those teams. The ranking table is not re-walked; membership was already set. If n = 0 at the last opportunity, the vintage is not launched.
**First official publication / launch.** The first official publication date is after that NTI reconstitution. First official publication / launch date: 12:00 p.m. Eastern Time on 11 September 2026.
If the first official publication is mid-vintage (after that vintage’s NTI reconstitution):
- `Q` remains the quantities set at the NTI reconstitution (or as-of that window for the overlay). `Q` is not reset on the launch day.
- Reconstruct official-style daily values from the NTI reconstitution date (or the delayed NTI date) through the day before first official publication. Those values may be published as **reconstructed / historical**, labeled not live. They lead into the first official print. A simulation may use a named venue tape; this methodology stays exchange-agnostic.
- The first official live print **continues** the backfilled NAV path. It does not reprint 1,000.00 on the launch day.
**Later seasons.** The later-launch exception is **inception only**. Each subsequent vintage: membership and `Q` on the NTI reconstitution calendar; live DEF5NTI **rebases to 1,000.00** on that NTI reconstitution.
At each annual reconstitution after inception (§7.1 **rebased** of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)):
1. Freeze the prior live series as DEF5NTI.YYYY at its last official value (not reset to 1,000.00).
2. Reset membership under Section 3 and `Q` under Section 5. Composition change is not a market return.
3. Live DEF5NTI begins the new season at `I_R = 1000.00`.
The first vintage year is 2026 (ranking season 2025). That vintage freezes at the reconstitution (or delayed reconstitution) before the 2027–28 season. If the designated first official publication slips past that vintage, the first *published* vintage is the season whose NTI books are live at the designated launch; prior completed seasons may exist only as reconstructed lookbacks.

### 6.2 Formula by reference

NAV and the live level are as defined in §5 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology): `NAV_t = Σ Q_j P_(j,t)`; `I_t = I_(t-1) × (NAV_t / NAV_(t-1))`. If `NAV_(t-1) = 0`, `I_t = 0.00` until the next reconstitution (§9 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

### 6.3 Intraday marks

Indicative values every 60 seconds using the rates on held `Q` (§4 / §10 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). If a rate is not available, DEF5NTI holds the last valid rate. A carried-forward last valid rate produces no NAV change for that quantity until a new rate or a terminal rate is published.

### 6.4 Reconstitution pricing window

Rates at 11:50 a.m. through 12:00 p.m. Eastern Time (same window as NTI; §7.1 / §10 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

### 6.5 Resolution treatment

The terminal rate as published, included once at the next calculation interval after the rate publishes it. Typically 0 or 1; this methodology does not write 0.00 or 1.00 itself. No reinvestment. No mid-calendar successor (§8 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)).

### 6.6 Floor, 0.00, and upside

No official value below 0.00. A print of 0.00 is a continuing official value (§9 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). Upside is uncapped.

### 6.7 Performance convention and rounding

- **Vintage:** percent change from 1,000.00 at reconstitution to the terminal value is that season’s total return.
- **Live:** percent change between reconstitutions is a return. The live reprint to 1,000.00 is a rebase, not a return. Live prints are not chained across reconstitutions.
Index levels are expressed to two decimal places (§10 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). Official daily value uses the window in Section 4.5.

---

## 7. Index Maintenance

### 7.1 Update and reconstitution schedule

- **Indicative values:** every 60 seconds (live, after first official publication)
- Annual reconstitution (membership and `Q`; live rebase after inception): NTI calendar (Section 6.1)
- **First official publication / launch:** 12:00 p.m. Eastern Time on 11 September 2026 (Section 6.1). That publication is after the first vintage’s NTI reconstitution. Launch is not a rebase.
- **Official resolution:** when the rate publishes official settlement or void treatment, that published rate is used in the NAV calculation
- **Official daily value:** the DEF5NTI index calculated from the rates, not the rates themselves, 8:50 a.m. through 9:00 a.m. Eastern Time
- **Vintage freeze:** same time as the next live reconstitution
- Membership and `Q` change only on the NTI reconstitution calendar
- **Inception backfill:** if first official publication is after the first vintage’s NTI reconstitution, reconstructed / historical official-style daily values from that NTI reconstitution through the day before first official publication (Section 6.1)

### 7.2 Regular reconstitution

**Rebased** (§7.1 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)): after inception, live level starts each annual NTI reconstitution window at 1,000.00. Prior vintage frozen. New `Q` from equal-dollar using the reconstitution pricing window. The rebase is not a period return. Inception: if the first official publication is after that vintage’s NTI reconstitution, live continues the reconstructed NAV; it does not reprint 1,000.00 on the launch day (Section 6.1).

### 7.3 Successor and settlement

As defined in §8 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology): terminal rate as published; `Q` unchanged; settled names stay at that published terminal rate until the calendar; no mid-calendar successor; empty slot until the calendar; void, amendment, and non-binary enter only if and when the rate publishes them.

### 7.4 Halt and zero

0.00 is a continuing print (§9 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology)). A halted contract uses the last valid rate under §4 of [Adjacent Event Contract Index Mathematics Methodology](https://adjacent.markets/static/math/methodology); it does not, by itself, halt DEF5NTI. Index halt or delayed publication only if a disruption makes routine rates or rules unsuitable, under this methodology and Adjacent governance.

### 7.5 Market disruptions and data failures

When a rate is unavailable, DEF5NTI holds the last valid rate. If a disruption makes routine rules unsuitable, Adjacent with AIC guidance may publish indicative values, delay or temporarily suspend publication, or make a documented non-routine decision under Adjacent’s [governance policies](https://adjacent.markets/governance).

### 7.6 Voids, amendments, and corrections

DEF5NTI does not apply venue voids, amendments, or corrected contract outcomes itself. Those enter the index only if and when the rate publishes them. If the designated official ranking is restated after the reconstitution pricing window, roster membership does not change mid-calendar solely for that reason. The AIC determines restatements under the Corrections and Restatements Policy only if a DEF5NTI print was calculated incorrectly from the published rates, or if a rate is later restated.

### 7.7 Methodology review

The AIC reviews this methodology at least annually and may review after NFL schedule or statistics-publication changes, a change to the designated defensive ranking sort, NTI methodology changes, or other material events. Changing the designated sort away from regular-season points allowed per game is a methodology change.

### 7.8 Exclusion

A mapped franchise is omitted from a vintage only if it fails Section 3.3 (including vacated franchise stay-put or NTI exclusion). Adjacent will not launch a vintage if n = 0. A partial NTI book is not created to fill a slot. The table is walked under Section 3.3 until n = 5 or the table is exhausted.

---

## 8. Governance

### 8.1 Index Sponsor and Calculation Agent

Adjacent Markets, Inc. takes on Index Sponsor and Calculation Agent roles and responsibilities for DEF5NTI. Outcomes and decisions around calculations, screening, maintenance, and operations are performed by Adjacent.

### 8.2 Adjacent Index Committee

The AIC is responsible for overseeing this methodology, how it is interpreted, how it is maintained, necessary corrections, and other governance considerations. The AIC is governed by the [AIC Charter](https://adjacent.markets/static/aic-charter).
Routine implementation of this methodology does not require separate methodology change approvals.

### 8.3 Meeting Schedule

The AIC meets at least quarterly and on an as-needed basis. Reviews may be initiated for:
- Material methodology changes
- Market classification issues or questions
- Data quality issues
- Corrections or restatements
- Market disruptions
- Complaints
- Designated official defensive ranking source, same-rank ties, or franchise-mapping questions
- Vacated franchise, leavers of the league, or walk-the-table backfill questions
- Same-franchise collision (collision is not a vacancy)
- NTI methodology, sleeve, or calendar changes that DEF5NTI inherits
- Changes to data sources or [Adjacent Event Contract Real-Time Rate Mathematics Methodology](https://cdn.sanity.io/files/ddr9slt2/production/a85890e68d25ac741caaf256b31134318feeb647.pdf)
- Deferred reconstitutions or a franchise omitted under Section 7.8
- Other circumstances that may affect index integrity

### 8.4 Methodology Changes

Material changes require the process set out in Adjacent’s [Methodology Change Policy](https://adjacent.markets/static/methodology-change-policy), including impact analysis, AIC approval, and notice as applicable.

### 8.5 Conflicts of Interest

The AIC is responsible for ensuring that methodology decisions are made on the grounds of index integrity. Decisions should never be based on the economic interests of Adjacent Markets or products that reference DEF5NTI.

---

## 9. Risk Factors and Limitations

### 9.1 Zero and reconstitution-gap risk

A series may print 0.00 and remain there. **0.00 is a continuing print.** It is not, by itself, a halt, termination, or suspension. Live and vintage series at 0.00 continue to be published. If `NAV_(t-1) = 0`, `I_t = 0.00` until the next reconstitution. Empty or settled slots stay cash / empty until the reconstitution calendar. The live rebase to 1,000.00 is a discontinuity, not a market return. That discontinuity is the annual NTI reconstitution rebase after inception. If the first official publication is after the first vintage’s NTI reconstitution, launch is not a rebase and is not that discontinuity.

### 9.2 Marking and liquidity risk

Constituent marks are the rates (Section 4). Official daily prints and reconstitution quantities use the rates. Equal-dollar sizing means cheap Super Bowl sleeves can dominate a team book and therefore DEF5NTI.

### 9.3 Implementation cost and uninvestability risk

The index is uninvestable and gross of costs. A product that holds event contracts, swaps, or futures may face dealer availability, position limits, tracking difference, and other implementation constraints.

### 9.4 Resolution and contract risk

Resolution timing, contract voids, amendments, disputes, and rule interpretation can change the amount and timing of NAV and may delay a reconstitution.

### 9.5 Overlay and n < 5 concentration

DEF5NTI inherits NTI sleeve, wrap, exclusion, and calendar mechanics. If the designated source lists the same franchise more than once, collision is not a vacancy: that franchise appears once and the table is not walked for that reason. If a ranked franchise cannot reconstitute under NTI, that name is vacated and the table is walked until n = 5 or exhausted. If the table is exhausted with n < 5, each remaining team is a larger share of NAV.

### 9.6 Defensive-ranking overlay risk

The designated official ranking is a membership overlay, not the event identity. The designated official sort is regular-season points allowed per game. A yards, DVOA, or season-total ranking produces a different five. Mapping is franchise stay-put to that club’s current-season NTI book. The index does not follow coordinators, players, or scheme to a new club and does not keep a dissolved franchise. A vacated name can admit a lower-ranked defense only if that franchise can reconstitute under NTI. Defense only: a top-five offense cohort is a different series, not a second sleeve.

---

## 10. Changelog

| Version | Date | Changes |
| --- | --- | --- |
| 1.0 | 14 Sep 2026 | Published v1. Locked first official publication at 12:00 p.m. Eastern Time on 11 September 2026, and locked official daily and reconstitution pricing windows. |

---

## 11. Approvals

| Role | Name | Signature | Date |
| --- | --- | --- | --- |
| Chief Executive Officer |  |  |  |
| Chief Operating Officer |  |  |  |

---

## 12. Legal Notices and Disclaimers

This methodology document and all related index levels, data, calculations, analytics, research, files, and other materials are provided by Adjacent Markets, Inc. and its affiliates (“Adjacent”) for informational and benchmark purposes only. They do not constitute investment, trading, legal, tax, accounting, regulatory, or other professional advice and do not constitute an offer, solicitation, recommendation, invitation, or inducement to buy, sell, hold, subscribe for, enter into, or otherwise transact in any security, commodity interest, event contract, derivative, swap, fund, note, structured product, digital asset, financial instrument, or other product. Adjacent does not act as an investment adviser, commodity trading advisor, broker-dealer, fiduciary, sponsor, promoter, issuer, underwriter, or placement agent by publishing this methodology or any related index data.
Important: Adjacent indices are not predictions. Adjacent index levels reflect market-implied prices, trading activity, source data, and methodology outputs. They are not Adjacent’s forecasts, predictions, polling data, political opinions, endorsements, investment views, or statements regarding the likelihood, desirability, or merit of any candidate, party, policy, company, event, or outcome. Index levels may diverge materially from actual outcomes and from other measures of probability, sentiment, or expectations.
It is not possible to invest directly in an index. Any third-party product, strategy, instrument, or service that references, tracks, uses, or is benchmarked to an Adjacent index is the sole responsibility of the applicable issuer, sponsor, manager, exchange, trading venue, broker, adviser, or other third party. Unless expressly stated in a written agreement signed by Adjacent, Adjacent does not sponsor, endorse, sell, promote, manage, advise, issue, underwrite, guarantee, or assume responsibility for any such third-party product or strategy, and Adjacent makes no representation that any such product or strategy will accurately track index performance, achieve any stated objective, provide positive returns, maintain liquidity, avoid loss, or be suitable for any investor or user.
Adjacent indices may reference data from prediction markets, event-contract markets, exchanges, trading venues, data vendors, public sources, and other third parties. Such data and markets may be volatile, thinly traded, fragmented, delayed, revised, interrupted, subject to contract-resolution rules, affected by regulatory changes, or otherwise outside Adjacent’s control. Adjacent may use information it believes to be reliable, but does not guarantee and may not independently audit, verify, or validate the accuracy, completeness, timeliness, availability, representativeness, or continued suitability of any source data.
Adjacent seeks to calculate and publish its indices in accordance with their applicable methodologies, policies, and procedures, but errors, omissions, delays, interruptions, stale data, calculation issues, source-data issues, and other defects may occur. Adjacent may correct, restate, revise, suspend, delay, discontinue, or republish any index level, file, dataset, methodology, or other material at any time, with or without notice, in accordance with applicable policies or as Adjacent determines appropriate. Adjacent may also interpret, amend, supplement, rebalance, reconstitute, discontinue, or otherwise modify any methodology, calculation process, constituent universe, data source, weighting scheme, eligibility rule, pricing convention, publication schedule, or related policy, including through the exercise of expert judgment or discretion where permitted.
Adjacent is not currently registered with the U.S. Securities and Exchange Commission, Commodity Futures Trading Commission, National Futures Association, or any other regulator as an investment adviser, commodity trading advisor, commodity pool operator, broker-dealer, futures commission merchant, swap dealer, designated contract market, swap execution facility, exchange, or clearing organization. Adjacent is not currently registered, authorized, recognized, or endorsed as a benchmark administrator under the EU Benchmarks Regulation or the UK Benchmarks Regulation, and Adjacent indices may not be eligible for use by EU or UK supervised entities in in-scope financial instruments unless applicable requirements are satisfied. Any references to benchmark governance or IOSCO principles, if made, should be understood as Adjacent seeking to align with relevant principles, not as a certification, registration, authorization, or regulatory endorsement.
All Adjacent materials are provided “as is” and “as available.” To the maximum extent permitted by applicable law, Adjacent disclaims all express, implied, statutory, and other warranties, including warranties of accuracy, completeness, timeliness, availability, merchantability, fitness for a particular purpose, non-infringement, uninterrupted operation, and error-free operation. To the maximum extent permitted by applicable law, Adjacent will not be liable for any direct, indirect, incidental, special, consequential, exemplary, punitive, or similar damages; lost profits; lost opportunity; trading losses; investment losses; business interruption; loss of data; legal fees; expenses; or other losses arising from or relating to this methodology, any Adjacent index, any index level, any source-data issue, any correction or restatement, any methodology change, any third-party product, or any use of or inability to use Adjacent materials, even if Adjacent has been advised of the possibility of such damages. Nothing in this disclaimer is intended to limit or exclude liability, rights, obligations, or remedies that cannot lawfully be limited or excluded under applicable law.
© 2026 Adjacent Markets, Inc. All rights reserved. Adjacent, Adjacent Markets, Adjacent index names, Adjacent product names, Adjacent service names, and related names and logos are trademarks or service marks claimed by Adjacent Markets, Inc. These materials and all Adjacent indices, data, methodologies, and related content are owned by or licensed to Adjacent and may not be copied, modified, reverse engineered, redistributed, reproduced, republished, sold, licensed, used to create derivative works, used as the basis for a financial product, used as a benchmark for a product or strategy, or stored in a database or retrieval system for commercial purposes except as expressly permitted by Adjacent in writing.