Penalty and Incentive Model
Axiom enforces honesty through stake penalties; parameters are governance-adjustable.
Parameters
β
Losing voter penalty
0.10%
Yes
γ
Losing proposer penalty
0.20%
Yes
ε
Idle voter penalty
0.00%
Yes
MAXp
Max per-market penalty
0.25%
Yes
MAXe
Max per-epoch penalty
1.00%
Yes
Parameter changes proposed by Top 50% stakers require >⅔ of total staked value to execute.
Pool Formation
Each finalized market forms a penalty pool:
Pool = Σ(β * Vl) + Σ(γ * Pl) + Σ(ε * idle)Distribution
Unchallenged: no penalty pool; proposer receives fixed consensus bonus.
Challenged: 60% to correct proposer, 40% to correct governance voters.
Creator quality bonus (0.15% of market pool) applies only if market resolves without challenge (unchallenged optimistic resolution).
Governance voters are stakers (not market traders). Traders receive market payouts in settlement token; governance voters receive share-token rewards/penalties.
Enforcement
Penalties and rewards applied via share burns/mints:
Δshares = (usdDelta / sharePrice)Examples
Challenged resolution and unchallenged optimistic resolution examples are provided in the full spec illustrating penalty pool formation and distribution.
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