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Oracles and settlement

Two prices matter for every position: the one it opens at and the one it settles at. Neither is chosen by a person.

The opening price

A trade opens on a RedStone signed price. The app fetches a freshly signed BTC/USD price and passes it with the transaction. The contract verifies the signatures, the signer set, and the timestamp, then checks the price against Chainlink:
  • the Chainlink round must be fresh, and the signed price must agree with it within a band fixed in the contract;
  • the Base sequencer uptime feed must report the sequencer up and past its grace period;
  • the move since the previous round must be within the accepted range;
  • every Chainlink answer must be inside the feed's own valid bounds.
If any check fails the open reverts. A quote in that state says Price safety check failed.

The settlement price

A position settles on Chainlink BTC/USD. Once the settlement hour has passed, anyone can submit two consecutive Chainlink rounds: the last one before the hour and the first one after it. The contract verifies that they are consecutive, that they bracket the hour, that their timestamps and answers are valid, and that they are within the configured freshness limits. It then records the answer from the round before the hour as the settlement price for every position at that hour and direction.
The submitter cannot choose the price. They can only choose which valid pair to submit, and there is only one valid pair. The protocol does not interpolate, average, or use the round after the hour for anything except proof of bracketing.
When Chainlink migrates a feed to a new version, only the exact transition pair approved by governance is accepted across the boundary. Any other cross-version pair is refused. This can delay settlement across a migration; it cannot change the price.

Who settles

Anyone. Isometric runs a keeper, a small worker that checks every minute for expired positions, submits settlement, and pushes payouts. It has no special rights: it cannot pause, price, or move funds. If it stops, anyone else can do its job, and a settlement that is late is still correct.
The keeper is reimbursed for gas from the protocol's operating budget, which is funded separately from depositor money and trader payouts. Neither pool ever pays for settlement.

What settlement does

One transaction settles every position at the same hour and direction:
  1. Records the settlement price.
  2. For each strike at that hour, computes the total winning payout.
  3. Moves that amount from the pool's locked collateral into funded claims, which are set aside for winners and cannot be touched by anyone else.
  4. Returns the unused collateral to the pool's available balance.
  5. For a long expiry, attempts one conversion of the whole expiry's winnings from the market's asset to USDC.
Payouts within a strike are allocated by cumulative rounding, so the individual payouts add up exactly to the total and nobody's rounding comes out of anyone else's share.

The long conversion

Winning longs are owed the market's asset, cbBTC for Bitcoin. Settlement converts the whole expiry's winnings in one swap, so that each winner receives USDC rather than a token they must sell.
The swap runs only if the expected USDC value is at least $5, and it is accepted only if the output is within 0.5% of the expected value at the current oracle price. If either condition fails, or the price is unavailable, or the swap itself fails, the winnings stay in cbBTC and are claimable as cbBTC. The decision is permanent. There is no retry, because a retry would expose winners to a price the settlement did not fix.

Paying winners

After settlement, anyone can push USDC out to winners in fixed-size batches. Shorts are paid straight from their funded claims. Longs are paid once the conversion has succeeded. The keeper does this. A wallet that cannot receive the transfer is skipped without blocking the others, and its owner claims from Portfolio instead.

Fail closed

Every check in this page fails closed. An unsafe feed pauses new positions instead of opening them on a stale price. An invalid round pair is refused instead of settling on the wrong price. A conversion that cannot fill leaves winners holding the asset instead of a bad fill. The protocol prefers being late or unavailable to being wrong.
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