Torch Litepaper
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  • Abstract
  • Introduction
    • Problem statement
  • Solution limitations
  • Vision & Objectives
  • How it works
  • Continuous market
  • Forecasting model
  • Probability map
  • Public goods
  • Betting
  • No exits
  • Prediction resolution
  • Hitting the range
  • Payout system
  • Payout formula
  • Reserve management
  • System mechanics
    • Key parameters
    • Lead time quality
    • Local confidence
    • Boldness quality
    • Sharpness quality
    • Bonus share
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  1. System mechanics

Sharpness quality

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Last updated 1 month ago

Range sharpness measures how narrow or precise a trader's selected price interval is, relative to the current price of the token. It captures the trader’s willingness to make a high-confidence, precision prediction versus a broad, lower-risk hedge.

This produces a dimensionless value that is consistent across assets with different price scales. To map this to a normalized score between 0 and 1 (where 1 is extremely sharp and 0 is extremely broad), we use an exponential scoring function:

Sharpness Score=1−e−0.25Range Sharpness\text{Sharpness Score} = 1 - e^{-\frac{0.25}{\text{Range Sharpness}}}Sharpness Score=1−e−Range Sharpness0.25​

With initial parameters set to k=0.25:

Sample values:

0.05

0.993

Very sharp, high precision bet

0.10

0.95

Moderately sharp

0.25

0.63

Balanced between risk and coverage

0.50

0.39

Broad, conservative prediction

1.00

0.22

Very wide range