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So the initial liquidity is essentially just the market creator placing an initial bet, on both sides (or all options for a multiple outcome market) at the initial odds they are setting for each outcome. So for a binary market, lets assume the creator sets the odds at 80% for yes and 20% for no. The maximum loss would be if someone bought up all of the "no" shares and won (the outcome was "no"), and nobody bought any of the "yes" shares, the creator would would effectively have just lost their "yes" bet, and be out ~80% of the initial liquidity. Is that correct?
Absolutely.
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