Methodology

Core purpose

ARC is a Temporal Hedging architecture. It can assume defined PayBack obligations before the matching earned inflows arrive, but it refuses to spend paper gains as if they were cash. Unlike a strategy that maximizes terminal compounding or a yield product that implies smooth periodic payment, ARC distributes earned value across time while maintaining buffer coverage. Delayed, deferred, and retrospective PayBack are therefore protocol states: the obligation remains recorded, timing stays visible, and cash is released only after the system has earned enough to fund it.

The allocator protects universal defense first, routes earned excess through user and partner PayBack, and permits additional growth or surplus distribution only when the treasury remains adequately buffered. The question is not whether every bill is paid instantly. The question is whether the buffer system can carry timing gaps honestly and execute them from earned inflows without breaking defense.

What the simulation is

ARC backtests this protocol treasury against historical asset prices. The system harvests everyday volatility and supercharges in Supercharge (SC) zones, funds Strategic Growth (SG) buys in discount zones, services floor PayBack from earned inflows when available, and tracks buffers (CB, RB, EB) and OFL gates over time. Stress includes bear panics, incidents, and (where configured) a hack + recovery path.

Backtests use a 30-day payment window for technical speed, reducing 365 daily payment evaluations per year to roughly 12 windows. That window is an accounting cadence, not a promise of instant settlement. PayBack is retrospective and can be deferred until earned funding is available. Production may use the same windowed method or daily streaming once mature ARCI is eligible for the obligatory OFL floor and discretionary Enhancement PayBack; either way, earned-inflow-only settlement remains the rule.

For Class F, Value Multiplication Ratio (VMR) helps interpret flow-through recovery after capital has left the treasury. It is not a universal metric and does not apply to Class A status. Every class is evaluated first on PayBack service, maturity, and buffer coverage.

In pre-maturity runs, CB is expected to remain near zero during the first 365 days because new inflows are routed to RB_ofl to build long-term defense first. By policy, CB becomes the working buffer after day 365, once the protocol is operationally mature enough to use that buffer.

First-class protocol metrics

Scan and Compare use fully seasoned cohorts for comparable portfolio/core evidence. Each Inspect verdict reports earlier post-maturity evidence once receiving cohorts reach 365 days, while clearly separating it from the 730-day benchmark:

Additional metrics (Inspect Snapshot & Compare)

Price context

Each asset page compares the asset's start and end prices with ARC's weighted entry and exit values. This shows whether the result faced a headwind, benefited from a strong underlying asset, or remains inconclusive because the sample is too short.

• A large positive price move is a tailwind; throughput—and Class F VMR—should be judged relative to that help.
• A large negative price move is a headwind; stability under that tape is more defensively meaningful.
• The section also answers a simple question: Is this asset worth continued integration? That read is based on sample maturity, PayBack evidence, B/D defense, deferred timing state, and the asset's own tape.

Fundamental view (external context)

Backtest mechanics do not determine whether an asset remains worth integrating. Each asset page therefore separates ARC results from a dated external review of the underlying network, protocol, or company.

• Operating evidence — revenue or fees, activity, volumes, value secured, users, and current traction.
• Technical evidence — security model, roadmap, liveness, governance, upgrade path, and material dependencies.
• Economic evidence — supply, dilution, cash burn or capex, monetization, and dependence on market beta.
• Current context — dated catalysts, adverse events, and representative market discussion, clearly separated from underwriting evidence.
• Source order — official documentation, filings, or investor relations first; reputable analytics and news second; social commentary only as narrative context.

ARC VAS (Validation Architecture System)

Historical path metrics on Inspect pages are independent of ARC VAS, which validates the parameter-selection process (WFA / CPCV / PBO / ARC-VES / MC gate / final holdout). The publisher resolves each asset run through a fail-closed adapter:

• No package (pre-launch) — VAS panel omitted.
• No package (post-launch) — VAS Pending (gray; no scores).
• Package present, validation fails — Validation Evidence Invalid — never silent omit; no ARC-VES scores and no Accepted chrome.
• Package present, validation passes — status and scores from the public validation_summary only.

Accepted status never comes from ARC-VES alone. Trust-chain validation runs via tools/vas_validate.py before any public VAS score is shown.

Glossary

The Key terms controls on the Results page use these same definitions in context.

Limitations & what backtesting does not prove

• Execution is simplified. Backtests use historical prices and do not reproduce live slippage, market depth, transaction ordering, or timing gaps.
• Historical paths do not extrapolate. Holding through the tested volatility does not establish performance in a different macro or liquidity regime.
• Pre-maturity windows are incomplete. Any sample under 365 days has not tested a full ARCI obligation cycle. Results are early signals only.
• Class F VMR reflects capital distribution. ARC pays cash out rather than compounding indefinitely. This diagnostic does not apply to Class A status and never replaces adequate PayBack execution or B/D defense.
• Class F uses zone-budget Supercharge. SC activity is constrained by tier budgets. Do not compare Class F trajectories to Class A as if they share the same admission rules.
• Stress events are parameterized. Bear panics, incidents, and hack scenarios are configured inputs — not exhaustive tail-risk simulations.

Key formulas