In the Observed universe, Powers are based on Pacts, not the other way around. The First True Power was something like a shared fantasy, allowing simple descriptions to evoke much more detailed scenes, providing faster, more advanced communication than would otherwise be possible. These were not always truthful - lies, delusions, and the simple limits of memory and perspective could always translate into these, not to mention the outright fantasies. But they were curious for two reasons. First, that both parties could always agree on the details when they shared one, although they almost never appeared from the perspective of an actual body, and second, that they were not always consistently achievable, even with the exact same people and the exact same story.
There was a man, generations before the first Pact was devised, who had devoted himself to studying this phenomenon. His true name has probably been lost to the mists of time; all the myths call him some variant of Andralusia, a word meaning Wise One, but there are some hints that this meaning came into being afterwards, or it could have actually been his name. In any case, his work was extensive, cataloging the numerous factors that seemed to influence whether a vision would happen or not, and what could be done with them. He made early forays into how it rarely hindered combat, but he was primarily concerned with how personal biases could affect visions, and more troublingly, how the factors that most influenced successful visions seemed to correlate with situational drama, but not necessarily for the participants. He posited that the visions were not truly those of humans, but that they were simply sharing the sight of things outside the world, be it angels in heaven or devils in hell.
This was by far his most controversial point, as the First True Power had long been thought a natural phenomenon, exclusive to humans, and it had also been proved that trainable human action was a necessary factor in making them possible. Nevertheless, he managed to get enough of the presiding church on his side that he wasn’t executed for heresy, and his theories were mostly left alone, not quite in obscurity.
Several generations later, another man would look at Andralusia’s inconclusive research into midcombat visions, and realize that not only did they rarely hinder the viewer, they also appeared to grant greater strength and motivation, even when initially triggered by paralysis or indecision. He posited that the connection to the true viewers of the visions granted some power that both parties could manipulate, and believed that this could finally prove their existence. He devised a contract, in which he would make one of two simple choices based on different stimuli, and would be given power to work with at the same time, so he could learn what was possible with it. He tried several different methods of attracting attention to it, finally succeeding with a simple but difficult game of skill (bouncing a ball against a wall), which he challenged the Observer to beat.
To his surprise and fascination, it did. In one try.
His physical performance was improved, albeit within expected parameters, and was also remarkably uniform; there were very few random or wasted movements, despite the simplicity of the instructions he had made himself susceptible to. He suspected that that simplicity was in fact the cause, and he was mostly correct; he hadn’t specified free movement otherwise, and the power he was channeling optimized his stance. Several more tests correlated this, and he realized that it was probably impossible to channel the power granted by the connection in any way not previously specified, explaining something about visions. As to the Observer’s apparent skill, he had several theories, but assumed that the most likely explanation was that they were simply some degree of omniscient.
He immediately set out to learn the limits of what was possible with his Pact, starting with whether or not he could modify it while it was still running. He learned that it was possible but very difficult to do so without also changing his physical abilities, such as picking up a weapon or tool, and that simple effects were the easiest to grant, although they could be layered to achieve more fantastic abilities fairly easily. He spent quite some time playing around with various devices and the powers they granted, but he wasn’t done yet. At this point, his suspicions of the Observers true nature were rudimentary, based solely on the fact that it hadn’t killed him during his testing despite having obvious difficulty, but his eventual confirmation that they weren’t bound by time in the same way as humans came completely by accident. He was testing a new type of movement when his Observer made him dodge several obstacles he hadn’t seen while sharing it’s sight. This was unsurprising, what was surprising was that he learned of a much less frustrating path after he had already terminated all Observation Windows, with more rewards.
He eventually figured out that he could create a clause that would improve his powers as he fulfilled simple conditions, such as collecting materials or completing challenges.
He realized fairly quickly that if he made the conditions for advancement too simple, his Observer would lose interest, having gained some experience with their psychology in the course of his studies.
And so he made his Pact enhance some aspects of new things he encountered, thus creating scaling difficulty. It worked... spectacularly.
At this point, the stories all start conflicting again, but it is known that that man known to modern historians only as the Old Soul proceeded to wreak a swath of destruction across the countryside. He then appears to have paused for a bit, possibly as the ruler of a country, and was sealed away by an unknown party for a minimum of a quarter century.He has been freed at least once since then, usually by a greater Pactmaker. See: The Old Soul, Ouroboros Imprisonment, Historical Pactmakers