DIVA Protocol's universal settlement process
The goal of the settlement process is to determine the value of the reference asset prevailing at the time of expiration and with that, the payoffs for short and long position tokens. The settlement process starts right after the pool expires and ends when the status of the final reference value reaches "Confirmed" stage in which case position token holders can start redeeming their position tokens.
DIVA's settlement process was designed to accommodate different types of oracles including human oracles as well as decentralized oracle solutions such as Tellor, DIA, Band or Chainlink. It implements an optional dispute mechanism that can be activated for human oracles and a fallback data provider which steps in if the original data provider fails to submit a value (only guaranteed if data provider is whitelisted).
Below graph illustrates DIVA's settlement process:
Illustration of DIVA's settlement process
On a high level, the settlement process can be broken down into the following four paths:
IMPORTANT: The dispute mechanism was designed to prevent human error such as fat-finger error or not accounting for token split. It CANNOT prevent intentional malicious reporting! Users should always choose a trusted data provider from the whitelist to mitigate the risk of malicious actors.