NUTs for prediction markets

[joemphilips]

This is my ongoing attempt to support encoding Prediction Market Token with cashu.
My primary motivation is to

• Emulate Conditional Token Framework for flexible markets
• Support existing oracle infrastructure from DLC as much as possible.

There have been previous attempts to support DLCs on Cashu, for example:
#128

The purpose of those attempts was essentially to emulate a two-party DLC transaction using eCash tokens.

This approach is completely different. Each outcome is encoded as a separate token, and the mint is agnostic to the oracles. I believe this is a more natural representation of a prediction-market security token and enables a more liquid market.

This PR contains three NUTs

• NUT-CTF: Conditional token redemption via oracle-attested outcome keysets
• NUT-CTF-split-merge: Conditional token split and merge for trading positions
• NUT-CTF-numeric: Numeric outcome conditions with digit decomposition

Done self-reviewing, it is now ready for review from others. I will try to have a reference implementation ready when I have time. I may update the spec based on what I've learn during implementation.

It is possible to split CTF.md (Conditional Token Framework) into an independent PR if the maintainer wishes. Since this is quite a huge PR.

Reference implementation: cashubtc/cdk#1666

[joemphilips]

Reference implementation (WIP): cashubtc/cdk#1648

[lescuer97]

@joemphilips have you taken a look at this PR: #128? its a previous standard for DLCs in cashu. you might want to take a look

[joemphilips]

Hi @lescuer97, thanks for pointing it out. Yes, I've read it.

I didn't go into detail because the approach is quite different from mine. IIUC, PR #128 proposes an
ecash-native DLC framework, using the mint as a blind intermediary for two-party conditional
contracts.

My concern with that approach is that it's primarily suited for bilateral contracts (two parties
locking funds against a predefined outcome tree), whereas CTF is designed for prediction markets —
where you need liquidity, composable positions, and the ability to enter/exit freely before
settlement. The two have different scopes:

• DLC is for "Contract" - enforce a pre-agreed bilateral payout when an oracle attests to an
  outcome.
• CTF (this PR) is for "Market" - represent outcome exposure as tradeable tokens, enabling open market
  participation.

They're not in conflict. In fact, both can share the same oracle infrastructure (DLC oracle
announcements/attestations), which could benefit the broader ecosystem. But I believe CTF is the
more appropriate primitive for prediction markets within Cashu's trust model.

[joemphilips]

In case anyone's interested, I've been building a PoC application based on this protocol.

• Mockup website (very much a WIP): https://frontend-bitcaster-staging.azurewebsites.net/markets
• documentation: https://bitcasterdoc.com/user-guide/getting-started/overview/

[joemphilips]

This link should be replaced with an actual NIP after nostr-protocol/nips#1681 gets merged.

[joemphilips]

squashed and rebased