Technical Stuff
We have carefully studied multiple prediction market algorithms below:
Logarithmic Market Scoring Rule, invented by Robin Hanson, required a manually set liquidity parameter.
Dynamic Parimutuel betting, has proven to be unfair to early players because the payout is determined at the end of the event.
Constant function market maker, used by Uniswap and Polymarket, but the liquidity providers will inevitably lose money. Polymarket has recently decided to move away from its AMM.
The current Automated Market Maker (AMM) algorithms aim to mitigate financial losses for market operators. Therefore, there are always some flaws in each algorithm.
Since WOC street is not a real-money prediction market, we have more flexibility to offer a more simple approach.
WOC street modifies the existing algorithms and accepts the risk of paying out more $wisdom than what is collected in some rare scenarios.
To maintain the stability of the market, a dynamic trading fee is also imposed. This fee helps to avoid inflation over the long term and avoid arbitraging at the end of the event.
Conceptually, If a larger amount of money is bet on "UP," the probability of "UP" happening will increase, and the potential payout for betting on "UP" will decrease. This relationship offers a straightforward and easily understandable way to evaluate the probabilities of each potential outcome.
Last modified 1d ago