> ## Documentation Index
> Fetch the complete documentation index at: https://pnpprotocol.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Oracle Settlement

> How PNP settles prediction markets using LLM oracles with evidence-first evaluation, time-bounded lookups, and PNP DAO as the backstop.

## Oracle Overview

PNP settles prediction markets with an **LLM-assisted oracle** — a structured, evidence-first system that evaluates real-world outcomes and commits results on-chain. No token-weighted dispute votes. No third-party resolution councils.

* **What it does**: Decides YES/NO market outcomes or identifies non-resolvable/ambiguous cases.
* **How it decides**: Evidence-first evaluation that checks authoritative sources, extracts specific data points, and computes thresholds explicitly — not vibes, not summaries.
* **Where it runs**: Backs PNP markets with an API layer and a Solana settlement module.

## Two-Step Settlement

### 1. Criteria Generation (Before Trading)

After market creation, the oracle generates or validates settlement criteria before the market becomes tradeable:

* **Resolvability gate** — confirms whether the question is objectively answerable by the deadline
* **Authoritative sources** — builds a list of official sources to check at settlement time (governing bodies, official accounts, price feeds)
* **Objective rubric** — clarifies exact metrics, thresholds, and how to compute the outcome

Markets flagged as non-resolvable are filtered out and routed to refund paths. Only resolvable markets go live.

### 2. Settlement (At/After Deadline)

When the market's end time passes:

* **Time-bounded evidence** — the oracle only considers information available up to the market's deadline. No hindsight bias.
* **Source-checking** — checks the pre-listed resolution sources first, extracts the numbers or facts that resolve the question
* **Explicit computation** — shows the logic (totals, comparisons, thresholds), then decides YES or NO
* **Multi-provider consensus** — multiple AI providers can be queried. If they agree, settlement proceeds with high confidence. If they conflict, authoritative sources take precedence.
* **Finalization** — when decisive, the result is committed on-chain. When ambiguous or non-resolvable, a dispute/refund path is enabled.

## PNP DAO Settlement

Not every question fits neatly into structured evaluation. For markets that fall **outside the oracle's scope** — subjective questions, edge cases, ambiguous outcomes, or situations where the oracle cannot reach a decisive answer — the **PNP DAO** steps in as the settlement backstop.

### How It Works

* The oracle attempts settlement first using its standard two-step process
* If the oracle returns an ambiguous or inconclusive result, the market is escalated to the DAO
* **PNP DAO members** review the evidence and vote on the outcome
* The DAO's decision is final and committed on-chain

### Why a DAO Backstop?

* **Coverage** — some questions are inherently subjective or context-dependent. An LLM can't always adjudicate nuance.
* **Trust** — human consensus as the final layer ensures no market goes unsettled indefinitely
* **Accountability** — 20% of trading fees are allocated to the DAO, compensating members for the responsibility of being the last line of settlement

The DAO doesn't replace the oracle — it catches what the oracle can't. The vast majority of markets settle automatically. The DAO exists for the edge cases.

## Why This Oracle Works

* **Evidence-first** — requires checking listed sources and extracting exact values, not just summarizing headlines
* **Time-bounded** — date filters prevent leakage from after-deadline information
* **Source precedence** — official databases and governing bodies outrank general reporting
* **Deterministic rubric** — criteria define what counts, how to count it, and how to compare it before any decision is made
* **Multi-provider resilience** — multiple AI providers reduce single-model bias; disagreements trigger safe fallbacks
* **DAO backstop** — human consensus for edge cases the oracle can't handle


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