Inference MarketsMOCK
Documentation

Risks

Read this before you trade or redeem. It describes how Inference Markets works today, and nothing here is softened. Most of these are structural: they are how the protocol is built rather than things that might go wrong with it.

Inference coins are synthetic, and the protocol is short every one of them

An inference coin is minted by the protocol. INT is not a claim on a model provider, and no provider owes you anything for holding it. What stands behind a coin is the dollars and DIEM the RedemptionVault holds for it, plus the dollars in its peg bid, and nothing else. The PegManager mints coin into the ask at the feed price, against nothing, and keeps the dollars buyers pay. Every coin outstanding is a liability the protocol owes at whatever the index says tomorrow. If the price of inference rises, the liability rises with it, and the protocol is on the wrong side of that move. The short is not hedged.

Coverage is a published ratio, not a guarantee

Coverage is what the vault holds divided by what a coin owes, computed on-chain from live feeds so you can check it yourself. It is not a floor, a guarantee, or an insurance fund. It rises when inference gets cheaper, because the liability was priced on the day each coin was sold, and it can fall below 100% when inference gets more expensive or when DIEM drops. Between 20% and 40% of each coin's reserve is DIEM by value, so a fall in DIEM feeds straight into the ratio. Nothing closes a gap automatically. Anyone may top the vault up out of the protocol's fee share while coverage is under 100%, and that share is limited by how much the protocol has actually earned.

Redemption is capped per day

Each coin has a daily cap of 20% of its seed amount on redemption at the index, all wallets together, and a per-wallet cap of 5%, counted per rolling UTC day — $20,000 and $5,000 of coin at the seed price for a $100,000 seed — so that a wrong price cannot be drained against for long. On the day you want to exit you may be able to redeem only part of your position at the index; the rest routes into the thin peg bid or waits for tomorrow. The caps are owner configuration, changed with configure and shown by configOf(coin). They bound a manipulation window and do not make the vault more solvent. A redemption can also fail with a funded vault: a stale coin feed halts both payouts, a stale DIEM feed halts DIEM payouts, and an empty DIEM inventory reverts with InsufficientDiem. In each case a sale through the router falls back to that coin's V3 peg bid, which holds only $10,000 per coin. Redemption is first-come against the inventory that exists at the moment you call.

DIEM's daily credit is Venice's promise, not ours

One DIEM staked at Venice pays one dollar a day of Venice API credit, in perpetuity, under Venice's terms. Venice is a company and those terms are Venice's to change. Inference Markets is an independent project with no partnership and no agreement; "powered by Venice AI" is our own line. Inference Markets delivers the token, and Venice delivers the inference. If Venice changes the terms, stops honoring the credit, or goes away, Inference Markets has no power to make any of it good and DIEM is worth whatever the market says it is.

The DIEM pool is thin, and its price comes from it

The Aerodrome VVV/DIEM pool held about 2,350 DIEM of depth when we last measured it, against a DIEM price around $1,700. The vault buys inventory $2,000 at a time, five minutes apart, so a large DIEM redemption can exceed what a coin holds and stay unavailable until enough rebalance calls have refilled it. USDC redemption remains available throughout. The DIEM price is that pool's six-hour time-weighted average in VVV, times the VVV/WETH pool's six-hour average, times Chainlink ETH/USD. A six-hour average on a thin pool is harder to move than a spot price, and still not impossible: holding the pool off its true price for hours costs money but can be done. The vault charges a 1% spread on DIEM payouts and floors every rebalance at the average minus 4% for that reason, and a pool with no observations makes DIEM read stale rather than wrong.

The tokenized stocks are Coinbase's

The six AI stocks are B20 tokens issued by Coinbase for people outside the United States. A transfer to a sanctioned address reverts, and the issuer can pause transfers for a token at any time, which stops trading and payouts in it. If your wallet cannot receive a stock, the Distributor parks your payout in heldOf(asset, wallet) and you claim it later with claimHeld. It is held for you rather than lost, but it is held until the block clears, and it may never clear. The stocks trade on Aerodrome Slipstream pools holding between about $385,000 and $1.21M of USDC each, so a large conversion into one moves its price, and a stock is only offered while its token, its Chainlink feed and its pool are all configured.

INT, OPEN and AGENT are priced from what OpenRouter's public model list says the listed models charge. If OpenRouter changes its list, its format or its prices, the index follows, over three and a half days. If the Chainlink Functions network fails to run the job, no new samples are stored; after six hours without a publish the three coins read stale, which halts synthetic launches, repricing and redemption until samples flow again. The model lists are curated by the owner: the rule is published, the lists are on-chain, and any change is proposed in the open and cannot apply for 24 hours. That is a delay, not a veto, and the lists determine the price. A human decides which models are in the set.

The owner can change feed sources and routes

The owner — a single address today, recommended to be a TimelockController before mainnet — can register a different price source for any asset or switch one off, change the Aerodrome routes the adapter trades on, change the pair allowlist and the payout-asset allowlist, reconfigure the vault's caps, fee and spread, and sweep vault surplus above 110% coverage. None of those has a built-in delay except the index config. A wrong feed source would make every contract believe a coin is worth something it is not. The owner cannot set a price directly, cannot pay or skip a holder, cannot mint a launch token or the protocol token, and cannot remove a market's liquidity, because none of those functions exist.

The Buyback executor is a single key over protocol money only

Buyback.execute is the one maintenance call that is not permissionless. A single executor address, appointed by the owner, decides when to spend the Buyback's ETH on the protocol token and burn it, and supplies the price floor. A careless or compromised executor can execute the buyback at a bad price or not at all. It cannot withdraw the ETH, cannot touch any other contract, and cannot affect a price, a holder or the vault. The money at stake is the protocol's 30% buyback share sitting in the Buyback at that moment.

Smaller things that are still true

Feeds go stale, and staleness is a window. Class prices are stale after six hours, ETH after two, the stocks after twenty-six; DIEM and VVV are six-hour averages read live. Inside a window the on-chain price can be older than the market. A launch reverts on a stale feed, but a peg placed just before a feed went stale keeps trading at the price it was placed at until a fresh publish arrives.

Market tokens are market tokens. A launched token has 1,000,000,000 fixed supply, a $5,000 opening market cap and no backing of any kind. Its liquidity cannot be removed by anyone, including its creator and including us, so it cannot be pulled out from under you, and there is equally no floor under it. The creator buys first, at the opening price, before anyone else can trade. Fees are 1% to 3% per swap. Price impact near the open is large, because the whole curve spans a $5,000 to $35,000 market cap.

The route costs you something. Buying a synthetic coin takes from the ask one tick spacing above the feed, roughly 0.6% over; selling into the peg bid pays roughly 0.6% under. Each hop through the WETH/USDC pool, a peg pool or Aerodrome pays that pool's own fee. The site sets a 1% slippage floor below the quote, and a trade that would return less than that floor reverts.

Converted payouts happen at market, not at the index. If you ask to be paid in a stock or in DIEM, your claim converts through a live route at that moment's depth, with the minimum-out you pass. A synthetic coin's leg to USDC is at the index when the vault can pay; the leg into a stock or into DIEM on Aerodrome is at the pool's price.

Permissionless maintenance has a bounded cost. Anyone can sweep the protocol's share at up to 2% under the index, or make the DON run 26 times a day on the protocol's subscription. Those are the costs of having no operator, and they are the worst a stranger can do.