How markets work.
Every market here is the same machine. One scalar question. A dollar in escrow behind two opposite predictions. One official number divides it at the end.
The trade.
Both sides pay in: stress buyers pay their price, calm buyers pay theirs, and each pair's prices sum to the $1 locked in escrow. No margin, no liquidation; Solvency has the full picture.
Mint, merge, settle.
Minting is how the calm side enters: lock $1, get both shares, sell stress, keep cHY. Merging both claims recovers the dollar anytime, which is why the two prices sum to about $1; the arbitrage lives in Market price. At the end of each window the index divides every dollar under the Settlement rule, and new windows open each March and September per Series.
Scalar, not binary.
Forget finance. Bet on tomorrow's temperature.
A binary market pays on whether tomorrow crosses 110°. At 109.9° the yes share pays $0. At 110.1° it pays $1. Two nearly identical outcomes produce completely different payouts. And if you care how hot it gets, the standard approach is a ladder of threshold markets, above 100°, above 110°, above 120°, each its own market with its own price and its own separate pool.
A scalar market pays on the temperature recorded, and one market covers the whole range. At 100° or below, the hot side pays $0. At 130° or above, it pays $1. Between those points the payout climbs smoothly: 110° pays about $0.33, 120° about $0.67. A tiny change in the outcome makes a tiny change in the payout, not a flip from everything to nothing.
Binary markets pay for crossing a line. Scalar markets pay for where reality lands.
Credit losses, inflation, rates, volatility, benchmark returns: all continuous. A scalar market lets one market express the whole outcome instead of fragmenting liquidity across dozens of binary thresholds. RAVA is that market built for trading, not forecasting: you do not enter a number, you trade the market's pricing of it.
Where calm ends and stress begins.
The contract itself has no crossing line. Land in the middle of the band and the dollar divides down the middle; nobody won. Only at the floor does calm take the whole dollar, and only at the cap does stress. Everything between is a dial, not a switch.
The line that matters is yours, and your entry price draws it. Buy sHY at 12¢ and your shares redeem above 12¢ whenever the index finishes more than 12% of the way up the band. In an illustrative 0 to 40 band that border sits at +4.8%: finish above it and stress bought at that price profits, finish below it and calm does, finish exactly on it and both sides get back what they paid. The app shows this border as the implied finish.
Two traders in the same window can hold different lines. Someone who bought sHY at 5¢ profits on finishes that still lose money for someone who bought at 30¢. Calm territory and stress territory are not properties of the market. They are properties of the price you paid.
What else touches this benchmark.
The economic exposure is the same one the professional market trades: a dealer CDS position gains as credit stress rises, and so does sHY. The difference is what you measure and when you pay. A swap streams margin and coupons daily against a quote; a cHY or sHY share is bought once, prepaid in full, and pays once, on where the published index change lands over the whole window. Same fear, different container.
| Prepaid | No margin | Both sides | Standardized | Any size | |
|---|---|---|---|---|---|
| Dealer CDS swaps | No | No | Yes | Yes | No |
| Credit futures | No | No | Yes | Yes | No |
| Index swaptions | Buyer only | No | Yes | Yes | No |
| Return swaps | No | No | Yes | Partly | No |
| Credit ETFs | Yes | Yes | No | No | Yes |
 | Yes | Yes | Yes | Yes | Yes |
Every product above the last row needs margin accounts or dealer documentation. Where this market can be offered to retail is a regulatory question the venue answers per listing; shares come in retail sized increments.
Why market makers show up.
The pair can be hedged in the professional credit market, which is why professionals can quote it without holding a view. That recruits market makers by profit, not agreement. RAVA does not choose the market price.
Built for the asset, not adapted to it.
Every piece of this market was chosen for this specific number: the floor from its own nineteen year history, the settlement from its administrator's daily print, the venue from where its exposure hedges. The full checklist lives at How a market gets listed.