“passive liquidity deposits have never met order-book execution in prediction markets until now”
XO Labs publishes the first in a planned series on XO Vaults, a passive liquidity design that bridges the gap between CLOB platforms and pooled liquidity in prediction markets. It analyses three existing liquidity models and identifies a structural gap: platforms with best execution have no passive product, while platforms with passive deposits lack order-book execution. The article proposes a five-factor vault allocation algorithm with circuit breakers designed to protect against informed trading.
Some technical background helpful
Platforms mentioned: Polymarket, Kalshi, Azuro, SX Bet, Drift, Predict.fun, Hyperliquid, GMX, dYdX, Yearn, Morpho, Aave, Hedgehog Markets, XO Market