αQuant7Alpha

methodology · s7 ava

adaptive venue arbitrage
on prediction markets.

S7 trades binary outcome markets — Polymarket (Polygon CLOB, USDC-settled, EIP-712 signed) and Kalshi (CFTC-regulated event exchange, USD-settled, RSA-PSS signed). Five distinct engines harvest five different edges. Positions resolve when the event resolves, not on a continuous price exit — so the gate is inventory-aware and cycles are weekly.

taxonomy note

S1-S6 use the TRND / BRK / MR / SWP engine taxonomy — trend, breakout, mean-reversion, sweep — on continuous OHLCV markets. S7 uses E1 / E2 / E3 / E4 / E5 — latency, market-making, cross-venue, intra-market, news-NLP — on binary outcome markets. The taxonomies are not interchangeable. A trade tagged engine=MR on a S1-S6 page is not the same kind of object as a trade tagged engine=E2 on an S7 page.

signal flow


   ┌──────────────────────────┐    ┌─────────────────────────┐
   │  Polymarket CLOB         │    │  Kalshi event exchange  │
   │  (Polygon · EIP-712)     │    │  (CFTC · RSA-PSS)       │
   └────────────┬─────────────┘    └────────────┬────────────┘
                │                               │
                └───────────────┬───────────────┘
                                ▼
                ┌──────────────────────────────┐
                │  q7_s7 venue adapters         │
                │  (SS-01 in spec)              │
                └──────────────┬───────────────┘
                                ▼
                ┌──────────────────────────────────────┐
                │  fair-value + signal layer            │
                │                                       │
                │  E1 LAT_ARB  · CLOB delta watcher     │
                │  E2 MM_REBATE · 2-sided quotes        │
                │  E3 X_VENUE  · cross-venue arb        │
                │  E4 INTRA    · YES + NO != 1.00       │
                │  E5 NEWS_NLP · sentiment fair value   │
                └──────────────┬───────────────────────┘
                                ▼
                ┌──────────────────────────────┐
                │  Kelly sizing + risk caps     │
                │  (SS-03)                      │
                └──────────────┬───────────────┘
                                ▼
                ┌──────────────────────────────┐
                │  orchestrator → canon-api     │
                │  → broker adapter execution   │
                └──────────────────────────────┘

five engines · one paragraph each

E1 · Latency Arbitrage

E1 watches the Polymarket Polygon CLOB for incoming order events and acts on price-improving fills before slower participants can react. Targets micro-edges in 5M and 15M crypto-binary markets. Live RX01.

default alloc · 10%kelly · 0.25rx01 · available

E2 · Market-Making Rebate Harvest

E2 posts continuous YES/NO quotes inside the spread on Polymarket and Kalshi, harvesting maker rebates while managing inventory to resolution. The flagship allocator under live conditions. SD-06 FATAL on RX01's SyntheticMarketProvider — no order acks → engine cannot validate fills.

default alloc · 45%kelly · 0.10rx01 · sd-06 by design

E3 · Cross-Venue Divergence

E3 holds long+short across linked markets on Polymarket and Kalshi when their implied probabilities diverge beyond a fee-adjusted threshold. Used for C14 (US_ELECTION) and C16 (NFL_GAME). Held on RX01 pending market_pairs.json correspondence map.

default alloc · 20%kelly · 0.50rx01 · sd-06 by design

E4 · Intra-Market YES/NO Dislocation

E4 acts when a single market's YES + NO mid prices sum to materially less or more than $1.00 (after fees). Pays when one outcome's market is stale relative to the other. SD-06 FATAL on RX01's SyntheticMarketProvider — no symmetric YES/NO data path.

default alloc · 10%kelly · 0.50rx01 · sd-06 by design

E5 · News-Sentiment Fair Value

E5 maintains a fair-value estimate for event markets using a news-sentiment stream and trades against the market when implied probability disagrees materially. RX01 runs on a SYNTHETIC sentiment generator — engine code-paths exercise but params carry the SYNTHETIC_SENTIMENT_RX01 suffix; live trading not authorized.

default alloc · 15%kelly · 0.25rx01 · available

at a glance

E1 · LAT_ARBrx01 live

Latency Arbitrage

alloc
10%
kelly
0.25
E2 · MM_REBATEsd-06 synth

Market-Making Rebate Harvest

alloc
45%
kelly
0.10
E3 · X_VENUE_ARBsd-06 synth

Cross-Venue Divergence

alloc
20%
kelly
0.50
E4 · INTRA_ARBsd-06 synth

Intra-Market YES/NO Dislocation

alloc
10%
kelly
0.50
E5 · NEWS_NLPrx01 live

News-Sentiment Fair Value

alloc
15%
kelly
0.25

defect-code reference

S7 has its own defect-scan codes (SD-06 + SD-11 through SD-15) layered on top of the universal codes. The gate shape is unique — inventory and signature-reject ceilings are not present in S1-S6.

SD-06EngineDead

Engine cannot validate fills on the current data source. RX01 SyntheticMarketProvider returns no order acks → E2 (MM_REBATE) and E4 (INTRA_ARB) fail this check by design. NOT a failure of the engine code — a property of the synthetic environment.

SD-11FlipChurn

Position flipped between YES and NO outcomes more than the churn threshold in 24h on a single market. Flags noise-driven over-trading.

SD-12SilentSigReject

Venue rejected a signed order without surfacing a meaningful error. Catches degraded EIP-712 / RSA-PSS pipelines before they bleed Kelly-sized capital.

SD-13InventoryResolutionLoss

Open inventory at market resolution exceeded the weekly cap (default 5%). Binary outcomes resolve to 0 or 1 — uncovered inventory is the structural risk unique to prediction markets.

SD-14FeeOverrun

Cumulative fees consumed more of gross profit than the cap (default 30%). Polymarket maker rebate and Kalshi maker tier are load-bearing — overrun indicates a mis-tuned spread.

SD-15KellyCap

Sizing logic attempted to exceed the per-engine Kelly cap. Defended by the sizing layer; logged for audit so we can see when an engine wanted to bet bigger than its sizing rule allows.