Liquidity Providers

Anyone can become a liquidity provider by depositing collateral into a market’s FPMM.

LPs receive:

  • ERC-20 LP tokens representing their proportional ownership.

  • A share of trading fees.

  • Residual value from losing outcomes post-resolution.

LPs can withdraw liquidity anytime by burning LP tokens and reclaiming their share of pool assets.

Example

Market: “BTC Above $70K by 2025?” Initial Liquidity: $10 → 10 YES, 10 NO (Invariant = 100)

Alice buys $10 worth of YES tokens:

  • The AMM mints 10 YES + 10 NO tokens (Invariant temporarily breaks to 400).

  • To restore balance, it sends 15 YES tokens to Alice.

  • New pool state: 5 YES, 20 NO.

    • YES odds: 80%

    • NO odds: 20%

Each trade directly shifts the implied probabilities, making Predify an evolving indicator of collective belief.

PreviousTrading MechanicsNextSettlement and Resolution

Last updated