> For the complete documentation index, see [llms.txt](https://docs.axiomprotocol.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.axiomprotocol.io/whitepaper/how-axiom-works/axiom-governance.md). # Axiom Governance Axiom governance is the system that determines the truth for every prediction market. It replaces oracles, trusted committees, and moderators with a fully decentralized, stake-weighted process. The core principle is simple. The people with the most economic exposure have the strongest incentive to resolve markets honestly. Axiom Governance is built on three pillars: 1. **Optimistic resolution** 2. **Challenge and voting** 3. **Stake-based penalties and rewards** Together these create a high-speed, high-integrity resolution system that works at scale. *** ### **The Resolution Lifecycle** Every market follows the same resolution flow: 1. **Event ends** 2. **A top 50 percent staker submits the first proposal** 3. **Challenge window opens** 4. If unchallenged, the proposal auto-finalizes 5. If challenged, voting begins 6. If voting fails to reach consensus, the market escalates to all stakers 7. Once finalized, payouts and penalties are applied This process combines speed, decentralization, and economic accountability. *** ### **Optimistic Resolution (First Come, First Served)** Axiom uses an optimistic model for efficiency. As soon as the event outcome is known, the first eligible staker in the top 50 percent can submit a proposal. They must include: * The proposed outcome * Evidence sources * Proof the event occurred as described Once submitted, the proposal enters a challenge window (default: 6 hours). **If no one challenges it, the proposal is automatically accepted**. The proposer receives a **fixed consensus bonus** for submitting a correct and unchallenged resolution (default: 10 USD equivalent in the settlement asset) Optimistic resolution ensures that most markets resolve quickly without needing a vote. *** ### **Challenge and Initial Voting (Top 50% of Stakers)** If another top 50 percent staker believes the proposal is incorrect, they can submit a challenge with an alternative outcome. This triggers a [governance vote](/protocol-design/axiom-theorem/escalation-mechanics.md). Voting rules: * Only top 50 percent stakers from the locked resolution epoch may vote * Vote weight equals USD stake value * Voting window is 24 hours * A proposal must: * Reach quorum (minimum 10 percent of eligible stake) * Achieve a supermajority (>66.7 percent) If the proposal passes, the market finalizes. If the proposal fails or the vote becomes contentious, escalation begins. The [Protocol Design](/protocol-design/introduction.md) defines these thresholds clearly. *** ### **Escalation to All Stakers** Escalation occurs when: * No proposal reaches the 66.7 percent threshold * Quorum is not met * The vote is split enough to be considered contentious In this phase: * **All Axiom Prime stakers** become eligible voters * Weight is still based on USD stake * The same quorum and supermajority rules apply * If quorum is not reached, the vote auto-extends by 24 hours Escalation is rare. Its purpose is to handle controversial or unclear outcomes where a wider consensus is needed. If escalation still fails to produce a clear result, the market resolves as **Invalid** and all traders receive refunds. *** ### **Penalties and Rewards** Axiom uses [penalties and rewards](#penalties-and-rewards) instead of bonds. This creates a clean, self-contained incentive system rooted in staked value. #### **Penalties** Applied at market finalization: * Incorrect proposers lose 0.20 percent of their USD stake * Incorrect voters lose 0.10 percent * These penalties are applied by burning share tokens from their vault position #### **Rewards** Penalties form a reward pool, which is distributed: * 60 percent to the correct proposer or correct challenger * 40 percent to correct voters, proportional to their stake If the market resolved optimistically (unchallenged): * No penalty pool exists * The proposer receives the fixed consensus bonus * The market creator receives a 0.15 percent quality bonus from the market pool *** ### **Why Axiom Governance Works** Axiom’s governance model is designed to be: #### **Fast** Optimistic resolutions settle in hours, not days. #### **Decentralized** No oracles, no committees, no vote-buying, no governance tokens. #### **Economically aligned** Dishonest actors are penalized. Honest actors earn more stake. #### **Sybil-resistant** Splitting stake across multiple addresses gives no advantage. #### **Attack-resistant** To manipulate a market, an attacker would need to control a majority of protocol stake. This is economically irrational and self-defeating. #### **Scalable** Optimistic resolution covers most cases, while voting handles edge cases. #### **Transparent** Evidence is permanently linked onchain. All votes and penalties are publicly visible. Axiom governance transforms market resolution into a truth-finding game with real incentives and real accountability. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. 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