Perpetual Series

Belief Index series are classified by Maturity Type: Fixed or Perpetual. The distinction determines whether the series has a defined endpoint or whether its composition evolves over time.

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Fixed vs. Perpetual at a Glance

Belief Systems publishes both Fixed and Perpetual series. Perpetual is the right classification for thematic series whose underlying domain evolves over time – for example, indices tracking geopolitical conflict risk where new prediction markets emerge as new situations develop.

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The Analogy

A Perpetual series works like a reconstituting equity index. The S&P 500 does not hold the same 500 companies forever – its index committee periodically adds and removes constituents as the market evolves. An ETF tracking the S&P 500 rebalances its holdings to match the new composition. The index level remains continuous across those reconstitutions; the rebalancing trades are absorbed in the fund’s tracking difference. A Perpetual Belief Index series follows the same convention:

• New constituent markets are added through a formal reconstitution event initiated by Belief Systems.
• The fund trades on the prediction market exchange to align its custody holdings with the new target composition.
• The reported index level is continuous across the event – no visible step in the chart.
• The cost of rebalancing is absorbed in NAV and borne by existing investors, consistent with standard index fund practice.

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Market Selection Criteria

Candidate markets for inclusion in a Perpetual series are evaluated against six qualitative criteria. These are directional – they do not specify hard numerical thresholds, and are applied together rather than as a checklist. Belief Systems evaluates each candidate market across these six dimensions. Markets must demonstrate healthy participation and fit squarely within the series’ stated risk domain. Individual series may apply additional theme-specific criteria on top of this baseline – those are disclosed on the series detail page when present.

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Review Cadence

Each Perpetual series specifies a review cadence at creation. The default cadence is monthly.

• The review cadence is a commitment to evaluate the series composition on that frequency – not a commitment to change it.
• A review may conclude that no new market meets the selection criteria, in which case the composition is unchanged and the outcome is recorded.
• The review cadence is displayed on each series’ detail page.

Belief Systems commits to a consistent review rhythm rather than ad-hoc reconstitution. Reviews that result in no change are still reviews; the discipline is in the schedule, not in any given outcome.

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Chain-Linking (Index Continuity)

When composition changes, the raw probability-weighted aggregate (raw_nav) changes mechanically – different markets, different weights, different numbers. A Perpetual series uses chain-linking to ensure the reported index level is continuous across the change. The arithmetic is a single Decimal expression evaluated to 8 decimal places. The chart is continuous; the composition change is reflected only in the underlying market breakdown.

Why `raw_nav` is not continuous but `index_level` is

raw_nav is a snapshot of the current composition’s probability-weighted aggregate. When the composition changes, raw_nav changes too – it has to, because the markets and weights are different. index_level is the time series an investor reads; chain-linking re-anchors inception_raw_nav at each reconstitution so that index_level stays continuous even as the underlying basket evolves. The chain-link formula and a worked example are in NAV Methodology §4.8.

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Reconstitution Drag

Rebalancing custody to match the new composition has a real cost – spreads, slippage, and any placement cost on the CLOB. That cost is the reconstitution drag: the gap between realized NAV performance and the theoretical chain-linked index level over a reconstitution event.

• Drag is absorbed in NAV, consistent with ETF convention. There is no separate reconstitution fee.
• Drag is borne by existing investors of the series that incurs it. It is not netted across series.
• Drag is disclosed as methodology, not hidden. The term “reconstitution drag” is the standard index-fund term for the same concept.

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The Reconstitution Gate

During a reconstitution, the series enters a gate – a planned, bounded pause on mint, redeem, and NAV computation. The gate lifts automatically on success – when rebalance trades complete, custody positions match the new target within tolerance, reconciliation passes, and the post-rebalance solvency check passes. No manual acknowledgment is required to resume normal operations. If rebalancing cannot complete, the reconstitution follows an abort path: the old composition is restored, the gate lifts, and any trades already executed remain in custody as tracking error against the restored composition. Aborted reconstitutions are visible in the reconstitution history for the series.

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Investor Acknowledgment

Minting into a Perpetual series is a materially different act from minting into a Fixed series. The composition an investor mints into may change after the mint, through a reconstitution event the investor did not individually authorize. Belief Systems does not issue a prospectus. The pre-mint disclosure serves the equivalent function. Every mint order on a Perpetual series requires explicit acknowledgment that:

1. The series is a Perpetual series and its market composition may change over time through reconstitution.
2. Reconstitution costs are absorbed in NAV and borne by existing investors, consistent with standard index fund practice.
3. Mints and redeems may be temporarily paused during reconstitution events.
4. By minting, the investor accepts these terms.

The acknowledgment is recorded with each order. It is an explicit action – a checkbox, a confirm button, or equivalent – not a passive disclosure. Minting into a Fixed series does not require this acknowledgment.

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Audit Trail

Every reconstitution event produces a complete, auditable record:

• Date and time of the event.
• Markets added, with question text and condition identifiers.
• Weight changes: before and after, for each market.
• Chain-link anchor: the index level preserved across the event.
• Composition version: the before and after SHA256-tagged identifiers.
• Rebalance trades executed, with fill details.
• Realized reconstitution cost.
• Event status: completed or aborted, with reason.

The reconstitution history is visible on the series detail page. Aborted reconstitutions are visible alongside completed ones.

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What This Does Not Change

Everything else about how a Belief Index series works continues to hold for Perpetual series:

• Physical backing. Every share remains backed by actual prediction market positions held in custody. No synthetic exposure.
• Mint and redeem at NAV windows. Outside of the gate, Perpetual series operate on the same NAV-window cadence as Fixed series.
• Rules-based methodology. Market selection for inclusion in a Perpetual series follows the six qualitative criteria in Market Selection Criteria above.
• Full audit trail. Every reconstitution event produces a complete record – composition version from and to, chain-link anchor, trades executed, and realized cost.

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Further Reading