The market for the world’s largest asset class

We’re building the market for an asset class that already exists.

ProposedCounsel-gated

All instrument, issuance, auction, blockchain, and real-money mechanics below are preserved research, not live product claims. Only the clearly marked play-money demo is implemented.

People already invest in other people. Income Share Agreements at Purdue and Lambda. Athlete-revenue advances at Big League Advance. Music-catalog trading at Hipgnosis, Royalty Exchange, SongVest. Litigation finance. Life settlements. Revenue-share deals on private cash flows. The asset exists.Humans and their future economic output. What’s missing is a liquid, standardized, clearable market for it. Preflop is testing what that market could feel like with fictional people and play money.

Jump to pricing math →Read the spec →

Product truth

What the demo means, and what it does not

What does a backer own?

Counsel-gated

In today’s demo, only a play-money position in a fictional market. The intended Trajectory instrument would be a defined financial right tied to specified Total Economic Benefit, never ownership of a person, control over their work, or equity in every company they build. No real instrument is offered today.

How long does it last?

Proposed

The research model treats Trajectory Units as perpetual and Milestone contracts as ending at a stated deadline. The duration and enforceability of any real instrument remain undecided pending product, operating, and legal review.

How do exit and buyback work?

Proposed

The demo permits play-money trading. A real delisting, issuer buyback, hardship exit, pricing method, and holder treatment are not settled. No unilateral real-world exit or buyback right exists today.

What happens after death or incapacity?

Proposed

The demo makes no claim against a person or estate. The humane treatment of death, incapacity, hardship, existing positions, and any continuing economics is explicitly undecided and must be resolved with counsel before a real pilot.

What becomes public?

Implemented

Current profiles and activity are fictional simulations. A future issuer would approve each public profile field and milestone before publication. Exact disclosure requirements, private verification data, correction rights, and withdrawal procedures remain counsel-gated.

Who writes and resolves Milestones?

Demo-only

Preflop supplies scripted goals and simulated evidence for fictional people in the demo. Future milestone authorship, issuer approval, evidence hierarchy, conflicts, appeals, and independent resolution authority are undecided and cannot be inferred from the demo.

What are the fees?

Proposed

The play-money ticket discloses its simulated transaction cost before confirmation. No origination or real trading fee is currently charged or offered. A real fee schedule is undecided and would require explicit terms before launch.

Why this isn’t science fiction

Existing financial arrangements offer useful analogies, but none makes Preflop’s proposed instrument live or legally settled.

Analog market	What’s missing
Income Share Agreements (Purdue, Lambda, etc.)	Priced at a single handshake moment. No secondary. No repricing. Illiquid through maturity.
Athlete revenue advances (Big League Advance)	Bilateral contracts. No exchange, no order book, no standard covenant. One-to-one.
Music-catalog trading (Hipgnosis, Royalty Exchange, SongVest)	Mature instrument for one asset class. Doesn't compose with ISAs, athlete claims, or equity.
Royalty Exchange (auction platform)	Auctions, not continuous markets. No secondary repricing. No cross-category allocation.
Life settlement market	Illiquid, OTC, age- and health-gated. No standard pricing rail. Not accessible to non-specialists.
Litigation finance	Institutional-only. Case-by-case. No fungible instrument, no continuous pricing.

These analogies motivate product research. They do not establish a live Preflop instrument, market size, legal path, or investor right.

The three primitives

01TEB Definition

Total Economic Benefit, the comprehensive denominator. W-2 wages, 1099 self-employment, K-1 distributions, equity realizations, royalties, board fees, non-cash consideration at FMV. Closes every door an issuer could use to route around the covenant.

Read the full spec — TEB Definition →

02Obligation Ledger

Research design: an obligation ledger would track proposed claims against an issuer's defined TEB and enforce an aggregate capacity limit. This is not a live issuer or holder ledger.

Read the full spec — Cross-Listing Math →

03Conviction Engine

Proposed research model: eleven backward- and forward-looking signals could inform future review. No live issuer qualification or realized-outcome model is operating in this demo.

Read the full spec — Conviction v2 →

Pricing · the four stages

A future liquid instrument would require a fundamental anchor, a market-clearing price, and a continuous repricing loop. The four stages below are proposed research, not the pricing engine in the current play-money demo or an operating real-money market.

Stage 1 — Forecast

Evidence → forward TEB path

We take every piece of evidence on the issuer (tax filings, trajectory, sector, conviction signals) and produce a forward path of their Total Economic Benefit with low / mid / high bands. The path is piecewise exponential: a blended near-term CAGR, then a terminal growth rate beyond a 10-year horizon.

\widehat{\text{TEB}}(t) \;=\; \begin{cases} \text{TEB}_0\,(1+g_1)^{t} & 0 \le t \le 10 \\ \widehat{\text{TEB}}(10)\,(1+g_2)^{t-10} & t > 10 \end{cases} \qquad g_2 = 2\%

Worked: mid-band TEB today $= \$500{,}000$ , blended $g_1 = 8\%$ for 10 years, then $g_2 = 2\%$ terminal. At year 10, $\widehat{\text{TEB}}(10) \approx \$1.08\text{M}$ ; the forecast extends to year 75.

Why it’s robust —The forecast isn’t one number. It’s a band. Pricing uses the mid and carries the confidence interval through to the reference price, so a reader can distinguish high-conviction narrow-band issuers from noisy wide-band issuers.

Stage 2 — Reference price

Gordon-growth anchor for the first trade

Reference pricing for a future real-money Trajectory Unit remains proposed and is not implemented in this simulation. Preserved obligation-ledger research still uses a legacy pool-share denominator that has not been migrated to the proposed fixed 0.0025% unit design.

Status: under financial-semantics review. The former pool-share worked example is superseded research, not a current per-unit price. Supply, issued units, fixed per-unit claims, reservations and reference snapshots need coordinated review.

Why it’s robust —The reference isn’t the price. It’s the anchor the book is built around. Analyst-facing, transparent, and derived from the same public forecast every backer can inspect.

Roadmap —The discount rate $r$ is currently a platform constant (12%) in the preserved research model; cohort-conditional $r_c$ (with a survival-curve auxiliary on $V_{\text{HC}}$ ) is specified in design v1 at /spec/discount-rate Design v1 — In progress and remains proposed research. The cohort priors that feed V_HC are also being re-anchored to entry-pool data sources (Census ABS, BLS, AAMC, NCAA, IRS) with a survival-mixture $P_{\text{stay}}(t)$ added to the integration — design v2 at /spec/cohort-priors Design v2 — In progress and also remain proposed alongside the discount-rate change.

Stage 3 — First trade

Anchor meets order book

A future real-money venue could open through a separately reviewed order-book policy. Proposed circuit breakers are not active in the play-money walkthrough. The implemented demo uses LMSR for Milestones and one daily clearing for Trajectories.

Why it’s robust —Every venue for human-capital claims today either anchors on a single handshake-negotiated price (ISAs, BLA) or has no repricing mechanism (private cap-table secondaries). Continuous repricing against a public Forecast Engine is the structural break from ISAs as a category. The separate financing path can culminate in standardized Trajectory Units with continuous price discovery. A pre-trade anchor plus an open order book is how equities, bonds, and commodities have cleared for a century.

Stage 4 — Continuous repricing

Information updates reference; executions update spot

Every quarterly TEB report, every material event (single-source income ≥ $100K, notifiable within 7 days), and every conviction-signal update reshapes the forecast. The forecast may publish a new versioned reference range, but it never writes the market price. Canonical spot changes only when persisted buy and sell orders execute on the continuous limit order book. A designated market maker may quote from the public reference and its own inventory, but an unexecuted quote is never spot:

S_t \;=\; \begin{cases} P_{\text{fill},t} & Q_{\text{fill},t} > 0 \\ S_{t-1} & Q_{\text{fill},t} = 0 \end{cases} \qquad S_0 = \varnothing

Before the first execution, spot is null and the interface says “Not yet traded.” Reference changes, indicative auction values, and resting quotes remain separate fields.

Information events and their repricing direction

Event	Affects	Direction
Quarterly TEB report	Forecast mid	Re-anchors reference price
Material event ≥ $100K (notifiable within 7 days)	Forecast mid + CI	Anchor update + band narrowing
Conviction-signal update	Forecast assumptions + CI	Versioned reference update; spot unchanged
Sector regime shift	Terminal g	Reference update; order book determines spot
New obligation on same issuer (cap-check passed)	Capacity ledger	Unit rights remain undiluted
Missed report → deficiency notice	Liquidity premium π	Discount widens until cure
Verified extreme-positive income event	Band high + mid	Upside revaluation

Why it’s robust —The risk-adjusted rate $r$ is itself decomposed. Math-foundation Part 3.6 framing: $r = r_f + \pi_{\text{income}} + \pi_{\text{liquidity}} + \pi_{\text{moral hazard}}$ . The preserved research implementation uses $r = 12\%$ flat; Discount Rate v1 Design v1 — In progress replaces it with three cohort-conditional components $r_c = r_f + \beta_c \cdot \text{ERP} + \pi_{\text{illiq}}$ and remains proposed research.

This is the mechanism nobody else has built. Existing venues for human-capital claims either anchor on a single handshake-negotiated price (ISAs, BLA) or have no repricing mechanism at all (private cap-table secondaries). Continuous repricing is the structural break from ISAs as a category. Preflop has a fundamental anchor, a market-clearing price, and a continuous repricing loop, the three things a liquid instrument requires.

Read the full spec — Direct Listing pricing→

The Obligation Ledger · capacity across origination paths

The ledger measures different contractual obligations against one capacity limit without pretending they are the same instrument. A covenant is separate pre-conversion financing: its finite TEB obligation and reserved conversion allocation are recorded before any Trajectory Units issue. A Direct Listing issues Trajectory Units directly. After conversion, every issued unit joins the same standardized perpetual class for that person.

The capacity identity

u = 0.0025\% \qquad N_{\max}=10{,}000 \qquad uN_{\max}=25\%

Each Trajectory Unit carries the same fixed $u = 0.0025\%$ contractual share. Ten thousand is the authorized ceiling, not a promise to issue every unit. Units issue only when matching perpetual capacity is committed; a new issuance cannot dilute an existing unit.

The 25% invariant

\sum_i s_i\,\mathbf{1}[t_i^{\text{start}}\le t<t_i^{\text{end}}] + u\!\left(N_{\text{issued}}(t)+N_{\text{reserved}}(t)\right) \;\le\; C_{\max}=25\%

Finite covenant obligations and reserved conversion units count against capacity at reservation and again pass a cap recheck before issuance. On conversion, the reservation becomes issued capacity; it is not counted twice. The ledger is cross-validated by an analytic transition-point scan and a monthly-bucket scan. This guarantees aggregate obligations never exceed 25% of TEB while preserving a reproducible audit trail.

What the ledger records

State	Capacity treatment	Market treatment
Finite covenant financing	s during [start, T)	Separate and non-fungible before conversion
Covenant conversion reservation	u × reserved units	No units or continuous spot before conversion
Issued Trajectory Units	u × issued units, perpetual	One fungible unit class and one continuous order book

Separate valuation states

V_{\text{cov}}(t)=PV_t(\text{finite covenant payments})+PV_t(\text{contractual conversion allocation})

P_{\text{ref,unit}}(t)=u\int_t^\infty \mathbb{E}[\text{TEB}(\tau)]e^{-r(\tau-t)}\,d\tau \;\approx\; u\,\frac{\overline{\text{TEB}}}{r-g}

The first expression values the separate financing contract. The second is a reference value for one standardized Trajectory Unit after issuance or conversion. Neither expression writes canonical spot; only an executed trade can do that. See Stage 2.

Worked example · two origins, one unit class

Issuer Z is year 3 of a s = 5%, T = 7 covenant with a 2% conversion allocation—800 reserved Trajectory Units. The covenant is still separate pre-conversion financing. Z then applies to issue a further 3%, or 1,200 units, through a Direct Listing.

Step 1 · cap check (analytic scan + monthly bucket, both must pass)

Years 3–7: 5% finite + 2% reserved + 3% issued = 10% ✓ under 25%

Years 7+: 2% + 3% = 5% ✓ under 25%

Step 2 · issue 1,200 Trajectory Units; at most 600 may enter the primary auction

Step 3 · keep the covenant and its 800-unit reservation separate and non-tradeable before conversion

Step 4 · at year 7, recheck capacity before converting the reservation into 800 issued units

Step 5 · all 2,000 issued units are fungible in Z’s single Trajectory Unit order book

Origination history remains auditable, but it does not create competing perpetual classes or a second spot price.

Status: proposed financial research, not live issuance or an implemented per-unit pricing engine. Public profile and application-preview values are planning illustrations. A future approved listing would require its own governed reference range, distinct from any subsequently executed market price.

Read the full spec — Cross-Listing Math→

The Conviction Engine

Phase 1 covenant conviction is forward-looking by necessity. there’s no past trajectory on the platform yet. Direct Listings ship 5+ years of actual data. So v2 is hybrid: 60% weight on backward-looking signals (what happened), 40% on forward-looking signals (what’s next).

\text{Conviction}_{v2} \;=\; 0.6\,\text{Backward} \;+\; 0.4\,\text{Forward}

Backward · 60% · 6 signals

—TEB CAGR · trailing 5-year, recent 3 years weighted 2×
—TEB volatility · std-dev / mean of annual TEB
—Income diversification · Herfindahl–Hirschman concentration of income streams
—Event-driven income capture · monetization of IPOs, acquisitions, book deals, contract renewals
—Tax compliance record · on-time filing, no audits, no penalties
—Professional continuity · gaps / pivots / sustained engagement

Forward · 40% · 5 signals

—Industry trajectory · sector growing / flat / declining
—Age-adjusted runway · earning years remaining given age + role
—Pipeline indicators · signed contracts, vesting schedules, known future events
—Brand / network momentum · audience growth, citation velocity, reputation
—Stated intent · what the issuer says they’ll do next (weighted low)

The flywheel

The conviction engine does two jobs. Today: curation. Gating who qualifies to list. Tomorrow: anchoring.refining the forecast that feeds the pricing model. Every listing that pays out against its forecast is a training point. Every listing that underperforms is a training point.

In 18 months, Preflop owns the only dataset in the world that correlates early-career signals with realized human economic output. That dataset is the moat. It is not the app; it is the corpus. We cannot be overtaken by a better UI.

What’s rigorous, what’s judgmental

The ledger math and pricing formulas are rigorous and tested. The 11 conviction weights are seeded by economic judgment and will be recalibrated quarterly against realized TEB outcomes. The calibration harness is in the codebase today, logging empty until the first outcome lands. This is how every valuation engine in financial history has bootstrapped. The difference is Preflop architects the logging from day one.

Read the full spec — Conviction v2→

The market · three-tier architecture

Each tier unlocks the next. Primary without secondary is a handshake deal. Secondary without derivatives is a scratch pad. The three together are a market.

01Tier · Primary

Issuance

Direct Listings issue standardized Trajectory Units from a 10,000-unit authorized supply; the committed perpetual percentage determines how many units issue. The issuer may sell at most 50% of those issued units in a primary sale. A sealed-bid auction clears every winning allocation at one uniform price above the model-derived reserve. Retained units stay locked under the disclosed insider policy. Covenants remain separate pre-conversion financing.

02Tier · Secondary

Trading

After the required lock, one standardized Trajectory Unit class per person trades on a continuous limit order book. Units in that class are fungible after conversion; a covenant remains separate pre-conversion financing and is not fungible with the Trajectory Unit before conversion.

03Tier · Derivatives

Milestone markets

The current product layers person-specific, time-bounded milestone markets above each Trajectory Unit. Any future indices, options, or diversified products remain conditional on separate design, review, and authorization.

Robinhood routed retail access to markets that already existed. Preflop is the market. For an asset class that existed but never traded on a common rail. The prize is not a better broker. The prize is owning the rail.

How a Preflop raise actually clears

The pricing engine produces a number. The auction is what translates that number into a clearing price the market actually agrees to. Two concepts make every raise readable: the κ ratio (how the issuer’s ask compares to the engine’s forecast) and the κ-tier regime (which auction posture the issuer is allowed to take given that ratio).

The κ ratio in one line

\kappa \;=\; \frac{\hat V_{\text{HC}}}{V_{\text{HC}}^{\text{engine, mid}}} \;=\; \frac{P_{\text{target}} / e_{\text{eff}}}{V_{\text{HC}}^{\text{engine, mid}}}

$\kappa = 1$ means the implied valuation of the contractual trajectory claim matches the engine’s mid forecast. $\kappa > 1$ means the proposed raise asks the auction to clear that exposure above the model midpoint, asserting a stronger forward trajectory than the backward signal currently shows. The platform requires that the κ value sit in a tier consistent with the issuer’s conviction.

Tier	κ range	Conviction floor	Posture
Anchored	≤ 1.2	Any (curation gate)	Standard auction; engine-mid is the credible anchor.
Modest premium	1.2 – 2.0	≥ 65	Standard; bidder disclosure flags κ.
Elevated	2.0 – 3.0	≥ 75	Forecast-divergence rationale required; reserve floor moves to 0.85 of low-band.
Speculative	3.0 – 5.0	≥ 85	Flagged listing; smaller per-bidder cap; tighter clearing threshold.
Market-discovery	> 5.0	Not eligible	Listing rejected; raise forecast or conviction first.

The auction in one paragraph

Sealed-bid, uniform-price Dutch auction with per-bidder allocation cap (20% of supply), engine-anchored reserve (80% of low-band MCap divided by N), AON partial-clearing with retained allocation if undersubscribed but above the 60% minimum-clear threshold, and threshold-encrypted on-chain settlement so no front-runner can race the clearing block. Every winning bidder pays the same clearing price $P^*$ , regardless of their original bid. Full mechanism in the raise-mechanism spec.

Maya’s clearing in numbers

Pre-indication disclosure (T-4 weeks)

$V_{\text{HC}}^{\text{mid}} = \$3.01\text{M}$ , $V_{\text{HC}}^{\text{low}} = \$1.38\text{M}$ , $e_{\text{eff}} = 1.66\%$ , conviction 62, CI ±54%. Reserve published: $P_{\text{reserve}} = (0.80 \times \$1.38\text{M} \times 0.0166)/10{,}000 = \$1.84/\text{covenant interest}$ .

Tier check

Maya targets $\$75\text{K}$ : $\hat V_{\text{HC}} = \$75\text{K}/0.0166 = \$4.5\text{M}$ , $\kappa = 1.50$ — modest-premium tier requires conviction ≥ 65. Maya is 62. Platform forces target reduction to $\$60\text{K}$ — anchored-tier boundary, $\kappa = 1.20$ . Maya accepts.

Clearing

Bid book runs from $\$8.50$ down to $\$1.84$ reserve. Cap-adjusted demand at $\$7$ meets supply. $P^* = \$7.00$ , all 10,000 covenant interests allocated. Total raise: $\$70{,}000$ , 17% above adjusted target. $\kappa_{\text{realized}} = \$70\text{K}/0.0166/\$3.01\text{M} = 1.40$ .

Research-model comparison

The walkthrough above runs on the math-foundation forecast (TEB(10) = $600K). Run Maya’s exact inputs through the v2.1 Forecast Engine — cohort priors + bounded adjustments, shrinkage $w_{\text{personal}} = 0$ at $N = 0$ quarters — and the engine produces $V_{\text{HC}}^{\text{mid}} \approx \$860\text{K}$ , $e_{\text{eff}} \approx 1.78\%$ . At a $\$60\text{K}$ target raise: $\hat V_{\text{HC}} = \$60\text{K}/0.0178 = \$3.37\text{M}$ , $\kappa = 3.37/0.86 \approx 3.92$ → speculative tier (math-foundation says anchored).

The cohort prior says the median pre-seed issuer in this cohort doesn’t reach the math doc’s aggressive trajectory. These competing research outputs are not a live listing valuation. Read the full Maya walkthrough at /spec/forecast-engine §7.

Why it’s robust —In this proposed raise design, the clearing price would be reproducible from the bid book and a published methodology. The issuer’s ask, reserve and allocation would require independent review. No real raise or on-chain settlement is implemented in the demo.

The preserved forecast models explore cohort baselines, Bayesian shrinkage and bounded adjustments. Their outputs are research alternatives, not authoritative reserves, reference prices or real-market clearings.

Read — Forecast Engine v2.1→

Read — Human capital, e_eff, κ→

Read — full auction mechanism→

Where the returns actually come from

Returns depend on which contract exists at that point in the lifecycle. Before conversion, a covenant is separate finite-term financing with its own payment rights and a contractual allocation of reserved Trajectory Units. A Direct Listing issues Trajectory Units without a covenant phase. After covenant conversion, the issued units join that same standardized perpetual class. These states are valued separately; they are not two bundled claims trading as one instrument.

Two valuations, one eventual unit class

V_{\text{cov}}(t)=\underbrace{\int_t^T s_1\,\mathbb{E}[\text{TEB}(\tau)]e^{-r(\tau-t)}\,d\tau}_{\text{finite financing payments}}+\underbrace{PV_t(A_{\text{conversion}})}_{\text{contractual unit allocation}}

P_{\text{ref,unit}}(t)=u\int_t^\infty \mathbb{E}[\text{TEB}(\tau)]e^{-r(\tau-t)}\,d\tau,\qquad u=0.0025\%

The first expression is a reference valuation for the separate covenant contract. The second is the reference value of one issued Trajectory Unit. The reserved allocation is not an issued unit before conversion, and neither reference value is canonical spot.

Why the perpetual reference is sensitive to trajectory re-forecasts

In the Gordon-collapse form, the reference value of one issued Trajectory Unit at time $t$ reduces to:

P_{\text{ref,unit}}(t) \;=\; \frac{u\cdot\text{TEB}(t)}{r-g_{\text{terminal}}}

The perpetuity value scales as $1 / (r - g_{\text{terminal}})$ . When the market re-forecasts $g_{\text{terminal}}$ from 2% to 4% (modest re-rating after an early breakout), the denominator halves and the model reference roughly doubles. A finite covenant payment stream has no equivalent terminal denominator. This is a difference in reference-value sensitivity, not permission for the model to manufacture a trade: spot remains unchanged until the order book executes.

Two origination paths, one continuous unit market

Origin	Before issuance	Issuance event	After issuance
Covenant	Separate finite financing plus a reserved contractual conversion allocation	Capacity is rechecked; the reservation becomes issued Trajectory Units	The units join the person’s one fungible class
Direct Listing	No covenant financing; reference range and auction terms are reviewed	Committed perpetual capacity determines the number of units issued	The same standardized unit class trades after lockup

Origination determines how units come into existence; it does not create a second perpetual class. For a given person, converted covenant allocations and directly issued units carry the same per-unit right and trade in one continuous order book.

The Maya worked example: financing, re-forecast, conversion

Maya enters at age 20, pre-revenue, through a covenant with $s_1 = 3\%$ , $T = 10$ years, and a 1% conversion allocation. At $u = 0.0025\%$ per unit, that allocation reserves $400$ of the person’s authorized 10,000 Trajectory Units. The covenant remains separate financing until conversion. Forecasts come from the v2.1 Forecast Engine.

Each snapshot is reproducible through the lib/obligation-ledger reference path, but the model never creates a fill or a spot price.

T = 0Covenant starts

The ledger records the 3% finite obligation and reserves 400 conversion units. No Trajectory Units issue from the reservation, no continuous unit book opens, and spot is null.

L(0)=3\%_{\text{finite}}+400(0.0025\%)_{\text{reserved}}=4\%

The covenant may have a governed reference valuation, but it is not the Trajectory Unit’s market price.

T = 4Evidence update

Forecast re-weights: TEB(4) = $400K, reaching $3M by year 10, and terminal $g$ re-rates to 4%. That changes the versioned covenant and unit reference calculations; it does not produce an execution.

\Delta P_{\text{ref}}\ne\Delta S_{\text{spot}}

The public record can update its reference range while spot remains “Not yet traded” or at the last execution.

T = 10Conversion

The covenant reaches its written conversion point. The ledger rechecks capacity; if it passes, the 400-unit reservation becomes 400 issued Trajectory Units and the finite financing moves into historical state.

N_{\text{reserved}}:400\to0,\qquad N_{\text{issued}}:0\to400

Converted units carry exactly the same per-unit right as units issued through a Direct Listing. Their spot begins only with a canonical execution on the one shared book.

The covenant finances the pre-conversion period. The Trajectory Unit carries the standardized perpetual exposure after issuance. One can originate the other; they are never presented as two simultaneous perpetual classes.

The most sensitive reference-value outcomes are cases where $g_{\text{terminal}}$ itself re-rates upward — Maya becomes a category-defining founder and her career growth looks like 6–8% indefinitely. The DCF expresses that assumption through $1/(r-g_{\text{terminal}})$ ; the market decides whether to trade anywhere near the resulting reference.

The model publishes a reference. Orders discover the price.

Read the full spec — Pricing decomposition→

Conversion when the trajectory arrives, not a second unit class

A covenant is separate pre-conversion financing, not a locked Trajectory Unit. Its contract can define a term-end conversion or a governed early-conversion path for the reserved unit allocation. Conversion applies the written treatment for the finite financing, rechecks capacity, and issues standardized Trajectory Units into the person’s existing class. It never opens a parallel covenant unit market.

Prior ISAs vs Preflop

Prior ISAs: single handshake price, capped at 2–3× principal, sold upstream to a hedge fund, illiquid until the contract expires. Preflop: a governed covenant can reserve a future allocation in the same standardized Trajectory Unit class that Direct Listings issue. Before conversion the financing is separate; after conversion the issued units can enter the continuous market under the disclosed lockup policy.

Read the full structural comparison →

The three unlock paths

01Term expiration

Automatic at the end of the covenant term $T$ . The ledger rechecks the cap, then the contractual reservation becomes issued Trajectory Units. Those units join the one existing perpetual class; origination history remains auditable but does not create another class.

02Issuer-initiated early unlock

The issuer requests early unlock; Preflop reviews against a formal data + process checklist (below). If thresholds are met and the written contract authorizes early conversion, the ledger rechecks capacity and applies the contract’s financing-close and conversion treatment. The resulting units join the same continuous order book.

03Event-triggered consideration

Major observable liquidity events (an exit, an acquisition, a major funding milestone with independent verification) can trigger unlock consideration. Discretionary — Preflop’s review panel still gates. Never automatic.

The issuer-initiated process · seven gates

1Minimum data threshold. 8 quarters of auditable TEB reports for covenant issuers (two years on-platform). 4 quartersfor Direct Listings, which arrived with 5+ years of pre-listing history already. Without this, the reference price doesn’t have enough ground-truth to anchor defensibly.
2Reference price modeling. Preflop’s pricing team runs the current forecast through the Obligation Ledger, produces a refreshed $V(t)$ with updated CI band. Same pipeline, same invariants as a Direct Listing day-one anchor.
3Disclosure pack. Refreshed issuer disclosures, updated conviction score breakdown, and a current cap-ledger summary showing every active obligation under the 25% invariant.
4Market-maker engagement. A market maker contracts in for the first 90 days post-unlock and provides two-sided quotes on the book so early liquidity isn’t a thin-market guess.
5Tight circuit breakers on day one. A ±20% deviation from reference halts trading pending conviction-signal review. Bands loosen over the first 30 days as realized volatility establishes itself.
6Insider lockup — 18 months post-unlock on the issuer’s retained allocation. The issuer cannot sell their retained Trajectory Units for 18 months after the market opens. This removes the obvious gaming incentive (open the market right before a good quarter to dump your own bag) while keeping the lockup from feeling permanent — standard post-IPO insider-lockup convention, applied to the unlock event.
7Covenant rate is inviolate. The issuer signed for $s_1 = 3\%$ over 10 years. Early unlock does not renegotiate the share rate, term, conversion allocation, financing-close treatment, or TEB definition. It can proceed only through the conversion path already written into the covenant.

Maya early-unlock walkthrough

Year 2.Maya’s Series A closes and the model publishes a substantially different reference range. Her reserved conversion units are not yet issued, so there is no Trajectory Unit execution or spot to overwrite. The new reference can appear on /market while spot remains explicitly separate. Year 4.Maya requests early conversion. Her data threshold — 16 quarters of reported TEB, well above the 8-quarter minimum — is clean. Preflop validates the reference price, executes the covenant’s written financing-close treatment, rechecks the cap, and converts the reserved allocation into issued Trajectory Units. A market maker can then quote on the one unit book. The first matched order establishes spot; the DCF update itself does not. Maya’s retained allocation remains subject to the disclosed 18-month insider lock.

Why this matters

For issuers

No more ten-year wait to validate the instrument. The issuers who break out early get visibility, and their successful early-unlock events become the proof points that recruit the next cohort.

For backers

Risk capital isn’t illiquid for a decade. Liquidity appears when the thesis plays out — without forcing every backer to become a ten-year lockup holder at the point of investment.

For the market

Breakout trajectories can produce public market benchmarks within 2–4 years, not 10. Every canonical execution produces evidence for subsequent market design. The price-discovery flywheel compounds without treating the person as the asset.

Read the full spec — Early unlock mechanics→

What’s proven, what’s heuristic

Honest labelling is the credibility move. Everything on the left is backed by tests and math. Everything on the right is seeded by economic judgment and will harden as data accrues.

Research that has been tested

✓Proposed Obligation Ledger arithmetic has cross-checked research tests, but no live claims
✓Pricing integral and Gordon collapse — closed-form, auditable, tested
✓Proposed cap invariant (≤ 25% of TEB) modeled in research, not enforced by this preview
✓TEB definition — comprehensive, unambiguous, closes routing-around attacks
✓Proposed risk-adjusted rate decomposition, not a published per-issuer live rate
✓Cap theorem (flow ⟹ stock) — Fubini-proven; the issuer always retains ≥ 75% of their own trajectory
✓ $e_{\text{eff}} = e$ exact for Direct Listings; closed-form for canonical covenant; piecewise via numerical integration in production
✓Auction clearing algorithm — sealed-bid uniform-price with allocation cap; reproducible from bid book

Judgmental today · rigorous tomorrow

◯Conviction weights — seeded by economic judgment, recalibrated quarterly against realized TEB
◯Forecast bands — mid/low/high derived from signals; CI tightens as issuer-history accrues
◯Terminal growth assumption — 2% placeholder; will become sector-conditional
◯Circuit-breaker thresholds — ±20% seed; will calibrate against realized volatility
◯Designated-market-maker spread and inventory parameters — versioned policy inputs calibrated against executed market data
◯κ-tier thresholds (1.2 / 2.0 / 3.0 / 5.0) — governance-set; will recalibrate against realized cohort performance
◯Reserve coefficient (0.80 of low-band V_HC), minimum-clear (60% of N), allocation cap (20%) — disclosed governance choices subject to revision

Read the spec

Every claim on this page has a rigorous document backing it, one click away.

Instrument

TEB Definition

The comprehensive denominator. Inclusion rules, exclusion rules, attestation channels. Every instrument prices against this quantity.

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Instrument

Covenant financing

Separate finite-term pre-conversion financing, its contractual unit allocation, holder rights, and capacity treatment.

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Instrument

Direct Listing

Standardized perpetual Trajectory Units from day one. Eligibility, review, lockup, issuance, and capacity math.

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Math

Direct Listing Pricing

Forecast → Reference price → First trade → Continuous repricing. Gordon anchor, executed-order spot, and information-event disclosure. End-to-end worked.

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Research

Cross-Listing Math

Proposed capacity and multi-listing math, preserved for research. Not live holder accounting.

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Math

Conviction Engine v2

Eleven signals, 0.6 / 0.4 hybrid. Today: curation. Tomorrow: anchoring. The flywheel, the calibration harness, and the data moat.

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Lifecycle

Pre-IPO Lock & IPO Unlock

Three thresholds that open the book — 4+ income reports, score ≥ 60, funding ≥ 50%. Why each exists, what holders can and can't do during lock.

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Research

Smart Contract Hardening

Proposed contract controls and audit roadmap. No on-chain Preflop settlement is live.

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