How It Works

# Oracle Rounds

S&F uses oracle rounds for canonical settlement.

The oracle does not provide high-frequency prices for a liquidation engine. It provides settlement prices for issuance, redemption, and pool rebalancing.

# Round-based settlement

When a user starts an OTC entry or exit, the request is attached to the current oracle round.

The request can be settled after the next oracle price is available. If it is not settled during the expected round, it can be canceled or refunded depending on the action.

This gives the protocol a clean settlement boundary.

# Data providers

Data providers stake ETC and submit prices during oracle rounds.

Only externally owned accounts can submit prices. Submission cannot be delegated through a contract, which keeps the price-provider identity tied to the staked account that can be rewarded or penalized.

Accurate participation earns MANA, a non-transferable oracle reputation score. MANA weights price submissions and determines the provider's share of future bounties funded by protocol activity.

# Consensus

Each submitted price carries the MANA weight of the provider that submitted it. The accepted price for a round is the price with the most MANA behind it.

Submitting an incorrect price creates slashable risk. After the round settles, a wrong submission can be liquidated. The provider loses MANA, can lose staked ETC according to the price divergence, and can lose pending rewards.

MANA is earned through accurate participation, reduced when stake is withdrawn, and reset if the provider is slashed.

The oracle security budget is economic:

        slashable stake
+ lost MANA reputation
+ lost future bounty share
> value extractable from a false settlement price

      

This does not make oracle manipulation impossible. No oracle design can remove that risk. The goal is to make corruption economically irrational for the markets the oracle secures.

# Mature oracle security

A mature oracle is strongest when:

• MANA is distributed across independent providers;
• stake is meaningful relative to extractable value;
• providers use independent data infrastructure;
• protocol activity funds recurring bounties;
• no single provider or cartel controls most MANA.

MANA does not decay by time alone. It decays by dilution: inactive providers stop earning while active providers keep increasing their share of total reputation.

# Hard cases

The oracle is weakest when market value grows faster than oracle security. Hard cases include:

• low provider participation;
• correlated providers using the same upstream data source;
• thin stake relative to pool value;
• high open interest around one settlement round;
• large secondary-market positions that benefit from a manipulated OTC settlement.

These are parameter and participation risks. S&F makes them explicit by tying stake, MANA, slashing, and bounties to the markets that use the oracle.

# What the oracle decides

The oracle provides the price used to:

• settle OTC entries;
• settle OTC exits;
• rebalance pool exposure;
• update the value of position shares.

It does not decide secondary-market prices. Market prices come from liquidity and demand.