Toxic Bitcoiner
· 1w
1. Can anyone make their own market? 2. It then has to be approved by Predyx?
3. Does the user provide the liquidity?
4. If yes, what optionality does the user have for managing the liquidity? Are the...
> 1. Can anyone make their own market?
Yes, anyone can create a market.
> 2. It then has to be approved by Predyx?
No, it doesn't need to be approved by us. However we have an exception for death markets in our TOS. If any user creates a death, we will disable it.
> 3. Does the user provide the liquidity?
Yes at this point of time, creator provides the initial liquidity. We're in the process of launching hybrid CDA/CLOB Markets within a month or two, where the majority of the liquidity will be provided by the market-makers.
> 4. If yes, what optionality does the user have for managing the liquidity? Are there set parameters?
At this point of time, PREDYX uses LMSR AMM (Automated Market Maker) for markets. Thus the creator provides the WCL (Worst Case Loss) for the markets fully configurable with Liquidity. The creator gets to keep 95% of the fees generated from the markets.
In short , here's how the liquidity and WCL works:
WCL = b * ln(N)
b = liquidity parameter
N = number of outcomes
ln = natural logarithm
For example a market with 1M sats liquidity (b), the creator provides 693147.18 sats as WCL for a YES/NO market.
b = 1_000_000
outcomes = 2
wcl = b * Math.log(outcomes)
wcl = 693147.18 sats
With LMSR AMM the liquidity is static, this will change drastically when we launch hybrid CDA (less than two months) where majority of the liquidity will be provided by market-makers.
Thus if the creator is good at creating high demand markets, this can become his income stream where he/she gets to keep 95% now the market fees.
> 5. Who settles outcomes?
At this point, we (PREDYX team) resolve the markets. However, we're also building UMA style oracle for markets resolutions. Once the UMA Oracle is out (in less than 2 months) - then the markets will be resolved by group of oracles.
