Free lesson · Prediction foundations

Resolution delay and capital lock-up

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An event can be decided before your collateral becomes withdrawable. That delay changes the economic value of a payoff.

Distinguish scheduled event time, initial resolution, dispute finalization and redemption availability. A dispute may change the amount as well as the time paid.

Start with a certain amount and discount over an assumed delay. For uncertain delay, average discounted scenario values rather than automatically discounting at the average delay. This lesson prices time only, not default risk.

Apply it in a strategy

• Compare otherwise similar claims with different resolution and withdrawal schedules.
• Record the input timestamp, executable quantity, currency and horizon. Reconcile the result with a cash-flow or state table.
• Stress this failure condition: Dispute/default scenarios can change payoff amounts, so time discounting alone is insufficient.

Research deliverable

Build and explain a resolution delay and capital lock-up worksheet. Compare otherwise similar claims with different resolution and withdrawal schedules.

Evidence boundary: Synthetic arithmetic and scenarios illustrate mechanics. They are not historical returns, a paper replication, or evidence of an executable edge. Research sources and their access limitations are recorded at the end of this module.

# Python 3.10+; standard library unless NumPy is imported below.
# Inputs and outputs use the units defined in this lesson. Synthetic teaching example.
def delayed_value(payment,annual_rate,days):
    if payment<0 or days<0 or 1+annual_rate*days/365<=0: raise ValueError("Invalid cash-flow inputs")
    return payment/(1+annual_rate*days/365)

print(delayed_value(1,.10,73))