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0 sats \ 3 replies \ @cheerioMsSophie 19 Sep \ parent \ on: ⚡️ A Bitcoin-native prediction market powered by sats and Lightning is here! lightning
This sounds nice, as long as the team is not invested in the bets it resolves.
I do not suggest this is the case, i just want to highlight the contra of centralized resolving.
Regarding the cancelation of a market: would it be possible to refund at the individual price the participants entered the market?
Otherwise it would not really be a refund but more like a forced liquidation at marketprice.
I'm glad I could address some of your concerns! We're still a small team, and funnily enough, none of us have a real interest in betting ourselves—we just love creating markets. That’s what gets us excited! Internally, we even compete based on metrics like the number of traders, trading volume, and even market likes. It’s basically our version of Instagram!
As for market cancellations, we're still ironing out the details. To give you a better sense of our approach, we use the LMSR (Logarithmic Market Scoring Rule) algorithm for pricing and odds calculations. Unlike traditional crypto trading, where market makers and takers are abundant, prediction markets don’t work the same way. That’s why liquidity is crucial for market fluidity, and we’ll be injecting a significant amount of it ourselves to keep things moving.
In the event of a market cancellation, we’re planning to forfeit our injected liquidity to compensate traders. However, we also plan to allow external Liquidity Providers (LPs) to inject liquidity based on a fee-sharing model. Here’s where the dilemma lies: we can’t expect external LPs to forfeit their stake in case of a cancellation. This is a tricky situation, and it’s going to take us some time to finalize a fair and acceptable market cancellation policy.
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Thank you for the details, i understand the problem better now.
Maybe you could put aside some yield from fees to an "insurance fund". This fund could be used to mitigate the impact on users in case of the cancellation of a market. This would only be possible if a cancellation is a rare case, otherwise the fund would never get to a decent level ;)
All in all this is a problem to be addressed later on i guess.
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Thanks for suggesting the "insurance fund"! It’s a fantastic idea to create a pool to hedge against market cancellation risks. Cancellations should be rare, so having an insurance fund in place could actually be a smart and effective way to mitigate any potential impact. We’ll definitely be exploring how this could work in practice!
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