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Methodology

Ballast Markets uses real-time maritime data to settle derivatives on chokepoint availability and port congestion. Our methodology ensures transparent, tamper-proof settlements based on objective data sources.

Data Sources​

AIS (Automatic Identification System)​

  • Global vessel tracking (position, speed, course)
  • Updated every 2-10 seconds for active transits
  • Satellite and terrestrial receiver networks
  • Validated against known vessel characteristics

Port Authority Data​

  • Berth occupancy and queue depths
  • Anchorage wait times
  • Draft restrictions and tidal windows
  • Vessel arrival/departure schedules

Geopolitical Feeds​

  • Official canal/chokepoint closure announcements
  • Maritime security incidents (piracy, conflict zones)
  • Regulatory restrictions (sanctions, transit bans)

Settlement Mechanisms​

Binary Chokepoint Markets​

Settles to 1 (Yes) or 0 (No) based on whether a chokepoint is operationally available during the contract period.

Availability Criteria:

  • No official closure or restriction announcements
  • Transit volumes within 20% of 30-day rolling average
  • No force majeure events blocking passage

Example:

"Will the Suez Canal be available for tanker transits during April 2025?"

  • Settles to 1 if ≥80% of usual tanker traffic flows through
  • Settles to 0 if closures, reroutes, or restrictions occur

Index Markets (Congestion)​

Settles to a numeric index representing port congestion levels (0-100 scale).

Index Calculation:

Congestion Index = (Current Wait Time / Baseline Wait Time) × 50 + 
                   (Anchorage Count / Baseline Count) × 50
  • Baseline: 90-day rolling average
  • Wait Time: Median hours from anchorage to berth
  • Anchorage Count: Vessels waiting offshore

Example:

"Shanghai Port Congestion Index - May 2025"

  • Index = 75 means 50% longer wait times + 50% more vessels anchored
  • Payouts scale linearly: $1 per index point

Data Quality & Validation​

Triple-Source Verification​

Every settlement data point is cross-referenced across:

  1. Primary AIS feeds (multiple providers)
  2. Port authority official data
  3. Satellite imagery (when available)

Dispute Resolution​

  • 48-hour window for market participants to contest settlements
  • Independent data arbitrator reviews flagged settlements
  • Final settlements published 72 hours after contract expiry

Historical Accuracy​

Our methodology has been backtested against:

  • 5 years of historical AIS data
  • 100+ chokepoint disruptions (Suez blockage, Panama droughts, Red Sea conflicts)
  • 99.8% alignment with ex-post market consensus

Market Design​

Contract Specs​

  • Settlement Period: Weekly, monthly, or event-based
  • Tick Size: 0.01 for binary markets, 0.1 for indexes
  • Max Leverage: 10x for approved market makers
  • Settlement Currency: USDC (stablecoin)

Risk Limits​

  • Position limits based on ADV (Average Daily Volume)
  • Circuit breakers at 15% intraday moves
  • Forced liquidation at 80% margin usage

Why This Matters​

Traditional derivatives (oil, freight rates, container prices) are lagging indicators. By the time Brent crude spikes due to a Hormuz closure, the hedge is too late.

Ballast's flow-first methodology lets you:

  • Hedge preemptively: Position before price impacts materialize
  • Trade causality: Bet on disruptions, not just their symptoms
  • Diversify alpha: Access uncorrelated returns from geopolitical/flow events

Next Steps​