On-Chain Verification

Belief Index levels are not computed from hypothetical baskets. Every series is physically replicated in actual constituent positions held on a public blockchain, and anyone can independently verify that those positions exist – without relying on Belief Systems’ reporting. This is a discipline no paper benchmark can offer: a traditional index holds nothing, and even a fund tracking one proves its holdings through custodian statements you cannot inspect. Here, the holdings sit on a public blockchain anyone can query. This page explains what can be verified, why it matters, and the concept of reconciliation.

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Why On-Chain Verification Matters

In traditional finance, confirming that a portfolio’s assets exist means relying on custodian statements and auditor reports – produced periodically (often quarterly) and requiring trust in the custodian and auditor. With blockchain-based custody, verification is:

• Real-time – Balances can be checked at any time, not just at reporting periods
• Independent – Anyone can query the blockchain directly; no need to request statements
• Immutable – Transaction history cannot be altered after the fact
• Public – The same data is visible to all parties; no information asymmetry

This does not eliminate all trust requirements (see Limitations below), but it provides a layer of transparency that is simply not available with traditional custody arrangements.

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What Can Be Verified

Because all assets are held on the Polygon blockchain, the following are publicly verifiable:

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The Reconciliation Concept

Belief Systems maintains an internal ledger that records all positions and cash balances. This internal ledger should agree with what is observable on-chain. Reconciliation is the process of comparing the two:

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Asset-Based Valuation

Belief Index values series holdings from actual on-chain token balances, not just theoretical index weights. This means:

• Position values are based on real holdings verified on the blockchain
• Each NAV computation records whether it used on-chain data or a theoretical fallback
• Anyone can cross-reference the reported position sizes with on-chain balances

How on-chain balances feed into valuation

For each prediction market position in a series:

1. The system queries the custody wallet’s balance of that specific outcome token on-chain
2. The token balance is multiplied by the current midprice to determine position value
3. All position values are summed to produce the series’ position value

This approach ensures that valuations reflect what the custody wallet actually holds, not what the system intended to hold. If there is a discrepancy between intended and actual positions (e.g., due to a failed trade), the valuation will reflect the actual state. (Within the private Alpha Program, the same position value feeds participants’ NAV per Share, together with custody cash and fees.)

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What This Means for Anyone Using the Data

• Constituents are real. The outcome tokens behind every published index level exist on-chain and can be independently confirmed by querying the Polygon blockchain.
• No hidden leverage. The actual on-chain balances determine position value, not a theoretical model or internal estimate.
• Auditable history. Every acquisition and disposition of positions is recorded immutably on the blockchain. The full transaction history is available to anyone.
• Continuous verification. Unlike quarterly audits, on-chain data can be checked at any time.

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Limitations

On-chain verification confirms that assets exist in the custody wallet. It does not, by itself, confirm:

• Series attribution – That specific assets are correctly allocated to a specific series (this is an internal ledger matter, not visible on-chain)
• NAV correctness – That the NAV computation methodology was applied correctly (requires verifying the computation, not just the holdings; see NAV Methodology)
• Program accounting – That Alpha Program share records are correctly maintained (internal ledger)
• Operational controls – That custody governance and withdrawal safeguards are functioning as described
• Future solvency – That current holdings will be sufficient to meet future obligations

On-chain transparency is one layer of trust. Combined with the published methodology, disclosed operational model, and internal reconciliation checks, it provides a comprehensive picture – but it is not a substitute for independent due diligence.