System Architecture

This document describes the high-level architecture of Oracle AI, including all components and how they interact.

Component Overview

┌─────────────────────────────────────────────────────────────────┐
│                           USERS                                  │
│   Traders  ──────  Creators  ──────  Resolvers                  │
└───────────────────────┬─────────────────────────────────────────┘
                        │
                        ▼
┌─────────────────────────────────────────────────────────────────┐
│                    FRONTEND (Next.js)                            │
│                                                                  │
│   wagmi + viem for wallet connection and contract interaction   │
│                                                                  │
│   ┌─────────┐  ┌─────────┐  ┌─────────┐  ┌─────────┐           │
│   │ Markets │  │ Trading │  │ Create  │  │Resolvers│           │
│   │ Browser │  │Interface│  │ Market  │  │Dashboard│           │
│   └─────────┘  └─────────┘  └─────────┘  └─────────┘           │
└───────────────────────┬─────────────────────────────────────────┘
                        │
          ┌─────────────┴─────────────┐
          │                           │
          ▼                           ▼
┌─────────────────────┐    ┌─────────────────────────────────────┐
│   BACKEND API       │    │           BLOCKCHAIN                 │
│   (Express)         │    │                                      │
│                     │    │  ┌─────────────────────────────────┐ │
│   REST Endpoints    │    │  │      Smart Contracts            │ │
│   • GET /markets    │    │  │                                 │ │
│   • GET /resolvers  │    │  │  OracleToken (ERC-20)          │ │
│   • WebSocket       │    │  │  OutcomeToken (ERC-1155)       │ │
│                     │    │  │  MarketFactory                  │ │
│                     │    │  │  PredictionMarket + AMM         │ │
│                     │    │  │  ResolverRegistry               │ │
│                     │    │  │  ResolutionEngine               │ │
│                     │    │  └─────────────────────────────────┘ │
└─────────────────────┘    └─────────────────────────────────────┘
          │
          │
          ▼
┌─────────────────────────────────────────────────────────────────┐
│                    AI RESOLVER SERVICE                           │
│                                                                  │
│   ┌─────────┐   ┌─────────┐   ┌─────────┐   ┌─────────┐        │
│   │ Market  │ → │Evidence │ → │   AI    │ → │ Submit  │        │
│   │ Scanner │   │ Fetcher │   │Analyzer │   │ Commit  │        │
│   └─────────┘   └─────────┘   └─────────┘   └─────────┘        │
│                                                                  │
│   Supported AI: OpenAI GPT-4, Anthropic Claude                  │
└─────────────────────────────────────────────────────────────────┘

Data Flow

Creating a Market

1. User fills out market creation form
2. Frontend calls MarketFactory.createMarket()
3. MarketFactory burns 10,000 ORACLE tokens
4. New PredictionMarket contract is deployed
5. Initial liquidity is transferred to market
6. Market is authorized to mint OutcomeTokens

Trading Flow

1. User approves ORACLE tokens for the market
2. User calls market.buy(isYes, amount)
3. AMM calculates price using constant product formula
4. ORACLE tokens transferred from user
5. YES or NO tokens minted to user

Resolution Flow

1. Market deadline passes
2. ResolutionEngine.initiateResolution() is called
3. Resolvers fetch evidence and analyze with AI
4. Resolvers submit commitments (hashed outcomes)
5. After commit deadline, resolvers reveal outcomes
6. Once 67% supermajority reached, market finalizes
7. Correct resolvers rewarded, incorrect slashed
8. Users can redeem winning tokens

Security Architecture

Trust Model

TRUSTLESS ZONE (blockchain verified)
    ↓
INCENTIVE-ALIGNED ZONE (staked resolvers)
    ↓
TRUST-REQUIRED ZONE (external data sources, AI providers)

Key Security Features

• Commit-reveal prevents front-running
• Stake requirements prevent Sybil attacks
• Slashing creates cost for malicious behavior
• Multiple resolvers prevent single point of failure
• Non-upgradeable contracts ensure immutability