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

# Detailed Example: AGI Narrative Future

> How a Theory market runs on HIP-4 with milestone triggers, fee-funded rewards, and AI oracle resolution.

## Overview

This walkthrough shows how an **AGI Narrative Future** runs from launch to final confirmation using HIP-4 Event Futures and the Theory reward pool on HyperEVM.

* **Main market (HIP-4)** — Binary market: `AGI conservative confirmation?` Trades between 0 and 1, no oracle during trading, settles to 1 on confirmation or 0 on disproof.
* **Milestone markets (HIP-4)** — Independent binaries for observable evidence that trigger rewards when they resolve.
* **Reward pool (HyperEVM)** — Fee-funded contract that pays time-weighted bonuses to main-market longs who held before each milestone.
* **AI oracle network** — Agents monitor news, vote on milestones, and post HIP-4 resolutions after a challenge window.

## Market Setup

1. Deploy the main HIP-4 market: **AGI confirmed?**
2. List milestone HIP-4 markets with explicit criteria:
   * **M1: Major Capabilities Claim** — Top-5 lab publishes AGI-level claim.
   * **M2: Benchmarks** — System clears multiple AGI benchmark suites with verification.
   * **M3: Independent Replication** — Unaffiliated team replicates key results.
   * **M4: Scientific Consensus** — Tier-1 journal treats the development as validated.
3. Publish that milestone resolutions trigger reward distributions to eligible main-market longs.

## Reward Pool Funding

* **Main market fees:** 50% of deployer fee share routes to the pool.
* **Milestone market fees:** 50% of each milestone market’s fees route to the same pool.
* **Optional sponsors:** Third parties can add liquidity to amplify rewards.
* **No protocol shorts:** The pool only pays what it holds; the protocol never takes directional exposure.

Example sizing for a moderate market:

* \$10M average open interest, 100% daily turnover, 0.05% taker fee
* $5,000 daily fees → $2,500/day to deployer → $2,500 × 50% = **$1,250/day\*\* to the pool
* Annualized: **\~\$456k** (\~4.5% of average open interest)

## Distribution Mechanics

* **Eligibility:** Must be long the main market before the milestone resolution timestamp; minimum 24h hold to prevent front-running.
* **Time weighting:** Rewards scale with the square root of days held (relative to a 365-day lookback).
* **Pool share per milestone:** Percentage-of-current-pool allocation keeps payouts proportional to live balance:
  * M1: 10% of current pool
  * M2: 15%
  * M3: 20%
  * M4: 25%
  * Final confirmation: 100% of remaining pool

## Milestone Resolution Flow

1. AI agents detect evidence and vote; 2/3 majority proposes resolution.
2. Challenge window (e.g., 6–24 hours) allows disputes.
3. HIP-4 milestone market resolves to 1 (or 0 if rejected).
4. Reward pool snapshots eligible main-market longs from before the resolution timestamp.
5. Time-weighted distribution pays out the milestone’s pool share; remaining balance rolls forward.

## Final Confirmation

* Conservative confirmation (e.g., peer-reviewed consensus or authoritative reference) resolves the main HIP-4 market.
* Main market settles binary P\&L (YES vs NO) through HIP-4 mechanics.
* Reward pool distributes 100% of the remaining balance to eligible longs who held before final confirmation.

## Why This Structure Works

* **Instant price discovery:** No oracle during trading; prices move as traders react to evidence.
* **Retroactive rewards:** Early conviction is compensated through time-weighted payouts on each milestone.
* **Bounded risk:** Rewards are capped by the pool balance; HIP-4 markets are zero-sum and fully collateralized.
* **Open-ended horizon:** Markets stay live until conservative confirmation or disproof—no expiry roll or timing games.