What is a fork?

Forking is the last market resolution method. It is a very disruptive process and is intended to be a rare occurrence.

After a market enters reporting, its initial reporter submits initial report, and the market enters the dispute round phase. and the reported outcome becomes the market’s tentative outcome. During a dispute round, any REP holder may dispute the tentative outcome by staking REP on an alternative outcome of the market which they consider the “truth”. To be successful the dispute, their staking REP needs to reach a certain amount. This amount is called dispute bond. With each successive dispute round, a higher dispute bond is needed. If the size of dispute bond reaches a certain threshold, the universe where the disputed market exists is split into multiple universes, one for each possible outcome of the disputed market. This split is the fork.

There are some things REP holders must do for a fork to not lose their REP.

What happens when a fork starts?

When a market forks, new universes are created. Forking creates a new universe for each possible outcome of the market. For example, a market has 3 possible outcomes: Yes, No, and Invalid. When the market forks, 3 new universes are created: universe Yes, universe No, universe Invalid. In each universe, its corresponding outcome becomes the final outcome, such as in the universe Yes the final outcome of the forking market is Yes, in the universe No the final outcome of the forking market is No.

The universe that created new universes is called the parent universe, and the newly created universes are called child universes.

Figure 1. forked universe

How the market enters the fork state?

If the size of the filled dispute bond is greater than or equal to 2.5% of all theoretical REP, then the market will enter the fork state. This market is referred to as the forking market.

For example, the forking market is in the following state:

And assuming that the outcomes Yes and No are disputed alternately, the changes in the filled dispute bonds which are calculated from the formula are shown below:

Dispute Round successfully-filled Dispute Bond
Yes No Invalid
Initial Reporting 0.35 0 0
Dispute Round 1 0 0.7 0
Dispute Round 2 1.05 0 0
Dispute Round 3 0 2.1 0
Dispute Round 18 68,812.8 0 0
Dispute Round 19 0 137,625.6 0
Dispute Round 20 275,251.2 0 0

In this case, the threshold (275,000 REP) is exceeded in Dispute Round 20. That is, a fork occurs when the dispute succeeds in Round 20.

When does a fork end?

The period from the start to the end of a fork is referred to as the forking period. The forking period ends when either 60 days have passed, or more than 50% of all theoretical REP is migrated to one of the child universes. Whichever child universe receives the most migrated REP by the end of the forking period becomes the winning universe, the other child universes become the losing universe.

What happens to the parent universe?

When a fork starts, the parent universe becomes permanently locked. In the locked universe, no new markets can be created and no markets can go through the reporting process. As a result of this, no markets can be finalized. (See restrictions on use for details.)

What happens to the child universes?

As mentioned above, when the forking period ends, child universes become either the winning universe or a losing universe.

In terms of what you can do, there is no difference between the winning universe and the losing universe. There are no restrictions for either universe. (See restrictions on use for details.)

However, all markets in the parent universe can only be migrated to the winning universe and the objects attached to the forking market, such as shares, open interest, unfilled orders, are also only migrated to the winning universe. (See migration of the objects for details.)

REP in any universe whose forking market outcome was a lie is expected to lose its value, since future traders won’t want to trade in a universe where reporters have a history of lying which means REP in that universe will not receive a meaningful amount of trading fees. When the system is working correctly, and people are behaving economically rationally (profit motivated), the expectation is that the winning universe will align with the truth universe and the losing universes will align with the lying universes.