Settlement

Settlement is the moment the contract reads the final FX rate, decides whether the option triggered, and freezes the payout amounts so hedgers can claim and LPs can withdraw.

It's mechanical. Once the oracle network agrees, the contract runs.

When can an event settle?

The contract enforces:

• block.timestamp >= expiryDate before any oracle submission is accepted.
• Each oracle calls submitRate(eventId, price) once. They can re-submit if their first attempt was outside the tolerance window.
• Once requiredSigners submissions are within toleranceBps of each other, the contract computes the median and calls settleEvent internally.

Why a median, not an average?

A median is robust against a single bad-data oracle. With N = 5 signers and requiredSigners = 3, two of the five can be wildly wrong and the settlement price is still the middle of the honest three. An average would let one outlier drag the result.

The settlement price determines everything

After settlement:

• For each hedge position, the contract computes payoutAmount based on where settlementPrice landed in the range. If it's outside the range, payoutAmount = 0.
• For LPs, the pool's remaining capital after all hedger payouts is divided pro-rata by shares. Premiums are also distributed pro-rata to LPs by their share at expiry.

Concrete payout examples

Event: USD/GHS, strike = 11.40, cap = 12.00, strikeAbove = true, initialRate = 11.07. Hedger bought notional = 100 USDC.

Settlement	Calculation	Payout
10.80	below strike, option worthless	0
11.40	exactly at strike	0 (technically (11.40 − 11.40)/11.07 × 100 = 0)
11.70	(11.70 − 11.40)/11.07 × 100	2.71 USDC
12.00	at cap, max payout	5.42 USDC
12.50	above cap, capped	5.42 USDC

Notice the denominator is initialRate, not spot at settlement. This is deliberate — it means the payout is determined entirely by the strike, cap, and initialRate the underwriter picked at creation time. There's no slippage-style adjustment between purchase and expiry.

What happens if the oracles never settle?

In practice this should never happen — the oracle network is multi-sig and the operators are responsible parties. But for safety:

• The hedger's premium has already been paid into the pool, so LPs are not worse off if settlement is delayed.
• There's an recoverExpiredPayouts(eventId) admin path that lets the protocol owner sweep unclaimed payout entitlements back to the pool after a long grace period (months). It's a last-resort path; in normal operation hedgers claim promptly.

Where to watch settlement state

GET /v1/hedge/events/:chainId/:id/stats

Returns the live settlement state of an event:

{
  "data": {
    "id": 1,
    "settlementPrice": "11700000",
    "triggered": true,
    "settledAt": 1775676533,
    "lpCount": 4,
    "hedgerCount": 12,
    "totalLiquidity": "100000000",
    "totalExposure": "850000000",
    "totalPremiums": "9750000"
  }
}

When settlementPrice > 0 and settledAt > 0, the event has settled and the hedger/LP/creator claim paths are open. See Hedger flow for the post-settlement claim sequence.