Auto-Stabilized Prediction Markets with Bounded-Risk LMSR
Provide liquidity with mathematically bounded risk and earn yield proportional to market activity.
Your maximum theoretical loss is capped at 0.682 × L for binary markets
Earn 30-50% of the 1% base trading fee from all trades
All certainty fees (0.25% to 3%) go directly to liquidity providers
Keep remaining treasury funds when crowd predictions are wrong
Liquidity depth L(V) = k × √V automatically adjusts to market activity
Certainty fees rise from 0.25% to 3% as prices approach 0.95-0.99
LPs break even around 0.8-1M volume, earn 20-60% ROI on high-volume markets
| Volume | Liquidity | Max LP Loss | Fee Income | LP Net |
|---|---|---|---|---|
| 100k | 1,265 | 862 | 300 | -562 |
| 1M | 4,000 | 2,728 | 3,000 | +272 |
| 5M | 8,944 | 6,099 | 15,000 | +8,901 |
| 10M | 12,649 | 8,623 | 30,000 | +21,377 |
Fully decentralized with user-controlled funds and transparent accounting
LMSR ensures continuous pricing and bounded loss for all participants
√V scaling matches liquidity to demand, maximizing capital utilization
System automatically adjusts to maintain fair odds and LP profitability