- The access problem — why private company exposure doesn't exist
- Live market data — SpaceX IPO valuation bands
- Constructing Arrow-Debreu securities from prediction bands
- Weighted composite tokens — LONG and SHORT with floors
- Token weights and acquisition cost analysis
- Payoff diagrams — visual proof of the structure
- Profit & loss by outcome
- Cost guarantee — why acquisition never wipes out profit
- Technical architecture — paired minting and LMSR
- Token architecture — fungible ERC-20 design
The access problem
SpaceX, Stripe, Databricks, Canva — the most valuable companies of the decade are private. No retail investor can gain directional exposure to their equity in any compliant instrument.
Traditional financial instruments for expressing a view on company valuation — equity, options, futures, total return swaps — all require the underlying to be listed on a regulated exchange. Private companies, by definition, are not listed. The result is a structural gap: billions of dollars in investor demand for private company exposure, with no instrument to express it.
Secondary market platforms like Forge Global and EquityZen require accredited investor status, minimum tickets of $50K–$250K, and impose severe lockup restrictions. Security-based swaps referencing private equity trigger Dodd-Frank Title VII margin requirements and swap dealer registration — prohibitive for any platform below institutional scale. Interval funds like Destiny Tech100 offer exposure but with extreme premium distortions, no short-selling capability, and quarterly liquidity at best.
Live market data
Loading live pricing from Polymarket for SpaceX IPO Closing Market Cap (Higher Strikes)…
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| Band | YES price | Implied probability | Volume | Midpoint (est.) |
|---|
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Arrow-Debreu securities from prediction bands
Each valuation band's YES token is an Arrow-Debreu security — it pays exactly $1.00 if and only if that specific state of the world is realized.
Because the bands are mutually exclusive and collectively exhaustive, the complete set of YES tokens spans the full probability space. One and only one band will resolve to TRUE. This gives us the foundational completeness property: the sum of all YES token prices equals $1.00, and any arbitrary payoff function over valuation outcomes can be replicated by purchasing the correct portfolio of band tokens.
This is the theoretical backbone of the Complete Contingent Claims Market (CCCM) framework. With these primitives, we can engineer instruments that behave like equity, like options, like structured notes — or like entirely new payoff profiles that don't exist in traditional finance.
Weighted composite tokens
Raw binary positions go to zero when the wrong band resolves. Vaulto's LONG and SHORT tokens use weighted portfolios across all bands to create equity-like payoffs with embedded principal protection.
The weight functions
Instead of buying YES tokens on only some bands, we buy across every band in different quantities. The weight function determines the payoff shape:
The floor parameter is the key innovation. Setting floor = 0.20 means the LONG token pays at least $0.20 even in the absolute worst-case outcome (No IPO, valuation collapses). This transforms a binary bet into something that behaves like equity with an embedded put — downside protection is structurally guaranteed, not dependent on hedging or counterparty risk.
Interactive floor adjustment
Use the sliders below to explore how different floor levels affect token economics. Higher floors increase principal protection but reduce maximum returns — the same tradeoff as buying downside puts alongside a long equity position.
Token weights and acquisition costs
The following table shows the exact weight allocation and per-band cost breakdown for both composite tokens at current market prices.
| Band | Midpoint | Mkt price | LONG wt | SHORT wt | LONG cost | SHORT cost |
|---|
| Resolving band | LONG payoff | LONG P&L | LONG return | SHORT payoff | SHORT P&L | SHORT return |
|---|
Payoff diagrams
The payoff chart plots the dollar value received by LONG and SHORT token holders for each possible outcome, against the fixed acquisition cost baseline.
Where a token's payoff line sits above its cost basis, the holder is in profit. Where it sits below, the holder takes a loss — but the floor ensures the loss is bounded. Notice the LONG and SHORT curves cross near the middle of the valuation spectrum: this is the breakeven zone where neither directional bet has a strong edge, reflecting the balanced risk/reward of the structure.
Profit & loss by outcome
Net dollar P&L and percentage returns for each possible resolution, showing the bounded loss and asymmetric return profiles.
Cost guarantee
Why acquisition cost structurally cannot wipe out profits.
Paired minting invariant
When LONG and SHORT weights are designed such that their sum is constant across all bands, the protocol can mint them as a pair at a fixed, deterministic cost — independent of market prices.
Monotonic weight guarantee
The LONG weight function is strictly increasing across bands (higher valuation → higher payoff). The acquisition cost is a probability-weighted average of all possible payoffs. Therefore, there always exist outcomes where payoff exceeds cost — specifically, any outcome above the probability-weighted expectation. This is mathematically identical to how equity works: you profit when the stock does better than what was priced in.
LMSR atomic bundling
For secondary market purchases (not paired minting), the Logarithmic Market Scoring Rule prices the entire basket of band positions in a single atomic transaction. Unlike CPMM-based AMMs where sequential swaps across multiple markets create path-dependent slippage, LMSR computes the exact bundle cost in one function call. The user sees a quoted price, clicks buy, and receives exactly that price.
Technical architecture
Protocol-level implementation for wrapping prediction market primitives into tradable composite tokens.
Smart contract flow
Oracle resolution
Markets resolve against verifiable valuation events: S-1 filings (for IPO valuation), 409A valuation reports, funding round announcements from credible sources (SEC filings, company press releases), or secondary market transaction data aggregated from platforms like Forge Global, Hiive, and EquityZen. Vaulto employs UMA's optimistic oracle with a dispute resolution window — any participant can challenge a resolution by posting a bond, triggering a decentralized arbitration process.
Why this cannot be replicated
The critical compliance insight: these contracts reference observable events (a valuation number), not equity itself. They are structured as CFTC-compatible event contracts rather than security-based swaps, avoiding Dodd-Frank Title VII margin requirements and swap dealer registration. The Kalshi v. CFTC precedent expands the permissible scope of event contracts, and Vaulto's market design targets valuation milestone events that fall squarely within this expanding category.
No listed option chain exists for SpaceX. No futures market. No total return swap accessible below institutional scale. The weighted prediction market composite is the only instrument in existence that provides continuous, floored, bidirectional exposure to private company valuations at any ticket size.
Token architecture
LONG and SHORT are fungible ERC-20 tokens backed by a shared vault — enabling deep liquidity, AMM trading, and full DeFi composability.
Why fungible tokens?
A critical design decision: should each minted position be a unique NFT with custom parameters, or a fungible ERC-20 that trades like any other token? The answer determines liquidity depth, composability, and user experience.
NFTs would fragment liquidity across unique positions. Fungible ERC-20s concentrate liquidity into deep pools, enable Uniswap trading, and allow the tokens to be used as collateral in lending protocols, yield strategies, and other DeFi primitives.
Vault architecture
The vault contract holds YES tokens for all prediction bands and manages the mint/redeem lifecycle for both composite tokens.
Mint flow
Users deposit YES tokens proportionally across all bands. The vault calculates the required quantity per band based on the weight functions, then mints fungible LONG and SHORT tokens.
Redeem flow
After market resolution, token holders burn their LONG or SHORT tokens and receive their weighted payoff from the vault's YES token reserves.
Smart contract structure
The system comprises six core contracts, each with a single responsibility.
Standard floor products
Rather than allowing arbitrary user-defined floors (which would create non-fungible positions), Vaulto offers standardized products with protocol-fixed parameters.
| Product | LONG floor | SHORT floor | Risk profile |
|---|---|---|---|
| Standard | 20% | 15% | Balanced exposure with moderate downside protection |
| Conservative | 40% | 40% | Higher principal protection, lower max return |
| Aggressive | 0% | 0% | Maximum leverage, no floor protection |
Each product is a separate pair of ERC-20 tokens with its own vault. All tokens within a product are fully fungible — a LONG-Standard token minted today is identical to one minted six months ago.
Composability
Because LONG and SHORT are standard ERC-20 tokens, they integrate natively with existing DeFi infrastructure: