Managers

Managers buy longZCB of an Instrument to assess it's risk.

These agents are responsible for assessing the risk of to be added instruments by claiming a junior(leveraged, first-loss) position to an instrument. They do so by buying longZCB in the instrument’s prediction market during the assessment phase and realizing profit by redeeming it later. Redemption prices of longZCB tokens are set such that they represent leveraged exposure to an instrument.

Our core belief is that the risk of investments should be assessed by those who have skin in the game

Reputation

Reputation system serves as an decision weighing scheme and an equitable value distribution mechanism as the risk assessment skills of different managers varies.

Better Value Distribution

These agents are characterized by a reputation score, which increases when their longZCB was profitable and decreases when it was not. A higher reputation allows a manager to acquire more leverage and/or get better prices when purchasing longZCB. This allows them to be more profitable per capital spent.

Decision Weighing Scheme

A higher reputation also grants them a heavier weight when aggregating decisions in the prediction market through increased leverage and budget(with increased leverage, a manager with x capital can have the same weight and positive profitability of leverage * x)

In traditional finance managers usually are rewarded with asymmetric compensations, where the convexity of reward structures allows them to undermine the risk of an instrument. In the proposed system they would instead share the same linear pay-off as that of LPs, but one that is amplified and becomes more capital efficient with their reputation.

Managers can also act as a utilizer and propose a profit-seeking endeavor by proposing an instrument(which deploys an AMM) and buying longZCB. In this instance, other managers would have to agree to the proposal by buying longZCB in the same newly deployed AMM.