Time Seventeen methodology
Draft v0.1 · design contract
Methodology
From event markets to auditable risk benchmarks.
T17 maps heterogeneous prediction-market observations into versioned index observations. Each published value retains its source data, rules, timestamps, coverage and quality state.
The current documentation is a design contract, not a claim that every component is already operating in production.
01 / Observe
Record the venue-native market before transforming it.
- Input
- Bid, ask, midpoint, last trade, mark, spread, depth and source time.
- Rule
- Keep source, calculation and publication timestamps separate.
- Output
- A source-attributed market observation with an explicit status.
Source observation → calculation run → index observation
- 1. Observe
- Record the venue-native market before transforming it. Input: Bid, ask, midpoint, last trade, mark, spread, depth and source time. Rule: Keep source, calculation and publication timestamps separate. Output: A source-attributed market observation with an explicit status.
- 2. Normalize
- Map different contracts into one event representation. Input: Contract, outcome and resolution definitions from each venue. Rule: Flag derived values and preserve the original contract meaning. Output: Comparable observations without silently forcing outcomes to sum to one.
- 3. Qualify
- Decide whether the market can support the calculation. Input: Resolution clarity, source reliability, liquidity and data quality. Rule: Rate market fitness from MR1 to MR5, or NR when evidence is insufficient. Output: An eligible, restricted or excluded observation with a recorded reason.
- 4. Construct
- Calculate against rules fixed by an immutable version. Input: Eligible observations, weights, normalization rules and effective interval. Rule: A rebalance creates a new IndexVersion; it does not rewrite history. Output: A point-in-time index calculation tied to one version.
- 5. Publish
- Attach coverage, quality and lineage to the number. Input: Calculation result, source observations, coverage and timestamps. Rule: Publish the documented quality state beside the level. Output: A versioned IndexObservation that can be interpreted and audited.
- 6. Reproduce
- Retain the context required to recreate a past observation. Input: Index version, calculation run and complete source lineage. Rule: Corrections append a superseding record and preserve the original. Output: A reproducible historical observation with an intact audit trail.
Market quality / event severity
Two scores. Two different questions.
Market Rating asks whether a contract can support reliable analysis. Severity describes the real-world consequences of the event. Neither score substitutes for the other.
Market fitness and data confidence →
View the same examples as a table
| Contract | Venue | MR | Severity | Resolution | Data quality | Eligibility |
|---|---|---|---|---|---|---|
| Strait of Hormuz closure | Illustrative venue A | MR2 | SEV-4 | Named maritime authority | Current / complete | Eligible |
| Regional escalation | Illustrative venue B | MR3 | SEV-3 | Defined multi-source verification | Current / limited depth | Restricted |
| Shipping disruption | Illustrative venue A | MR2 | SEV-2 | Port and shipping records | Current / complete | Eligible |
| Scheduled macroeconomic release | Illustrative venue C | MR1 | SEV-1 | Official statistical release | Current / complete | Eligible |
| Resolved sporting event | Illustrative venue D | MR1 | SEV-0 | Official competition result | Resolved / final | Excluded |
| Unverified disruption report | Illustrative venue E | NR | Unknown | Conflicting public reports | Insufficient evidence | Excluded |
Construction and coverage
Fixed by version.
An IndexVersion fixes constituents, weights, normalization rules and its effective interval. A rebalance creates a new version rather than rewriting earlier membership.
Illustrative version
T17-WAR-HORMUZ / v1.2
Available coverage
84%
| Constituent | Normalized probability | Weight | Observation state |
|---|---|---|---|
| HORMUZ-CLOSE | 0.640 | 28% | Valid |
| TANKER-DELAY | 0.580 | 24% | Valid |
| WAR-PREMIUM | 0.515 | 20% | Stale |
| OIL-TRANSIT | 0.430 | 12% | Valid |
| PORT-ACCESS | — | 16% | Missing |
Index observation at time t = F(index version, eligible observations, normalization rules, constituent weights, quality state)
The dependency model shows what the calculation needs without claiming an unapproved production weighting formula.
Coverage = available eligible weight / total eligible weight
Input lifecycle
Failure remains visible.
Missing, stale or corrected inputs are represented as states and reasons. They are not hidden behind an uninterrupted series.
Current state
Active
A current observation passes the source, quality and eligibility checks required by its index version.
It may enter the governed calculation.
- Missing observation
- Omit or record null; recalculate coverage and never replace the gap with zero.
- Stale price
- Retain only when the governing rule allows it, with source time unchanged.
- Outlier
- Exclude with a recorded reason when the documented validation rule is triggered.
- Venue outage
- Treat the unavailable source as missing; do not manufacture an observation.
- Trading halt
- Follow the active IndexVersion and make any restriction visible.
- Correction
- Append a superseding revision; never overwrite the earlier record.
Versioning and corrections
Original context stays attached.
Methodology versions, index versions and corrected observations remain separate records. Historical observations retain the rules that produced them.
Index version
v1.0 / Initial publication
- What changed
- The initial constituent set, weights, normalization rules and effective interval are fixed.
- Why
- Begins the versioned index history.
- Affected
- Observations calculated during the v1.0 effective interval.
T17 research and application layer
From signal to exposure.
The index records an event signal. A risk application asks how that signal can travel through markets, operations and balance sheets over time.
T0
Event signal
An escalation, closure threat or shipping restriction appears in event markets.
T1
Market repricing
Oil, freight, insurance and affected securities begin to adjust.
T2
Operating cost
Higher feedstock, transport and insurance costs reach importers and manufacturers.
T3
Financial loss
Margins, working capital, delivery schedules or asset values reflect the accumulated cost.
Strait of Hormuz
The time between an early signal and a realized operating loss is part of the exposure analysis.
Risk manager's lens
Signal strength alone does not define a hedge or a financial loss.
- Event probability
- Event severity
- Direction of exposure
- Transmission lag
- Exposure sensitivity
- Basis risk
- Liquidity
- Settlement quality
- Available capacity
Prediction-market positions may function as event-linked or parametric risk-transfer instruments in an appropriate structure. They are not presented here as legally equivalent to insurance, reinsurance, an insurance-linked security or a catastrophe bond.
Methodology resources
Inspect the specification.
The public methodology explains the decision chain. The technical documentation records the data model, field definitions, lifecycle rules and version history.