A smart contract or algorithm that provides liquidity and prices trades automatically based on a fixed mathematical formula, eliminating the need for traditional order books and designated counterparties.
Cluster: Information Theory
A smart contract or algorithm that provides liquidity and prices trades automatically based on a fixed mathematical formula, eliminating the need for traditional order books and designated counterparties.
Referenced in 2 articles
Over 100,000 Polymarket wallets have lost at least $1,000 since 2025; outside a handful of automated winners, participants are down $131 million. Gensyn reads that as structure, not skill: with no hedgers to pay the spread, makers earn a screening rent instead, carrying the mispriced side to settlement. In 24 hours of five-minute bitcoin markets, 91.4% of persistent makers' profit arrived at resolution, and 407 makers gained $45,300 while 12,749 retail accounts lost $66,700.
Designs the first computationally efficient prediction market for continuous outcome distributions using interval securities. Achieves logarithmic-time operations by decomposing the LMSR into a balanced binary tree, and extends to parallel submarkets at multiple resolutions with constant bounded loss.