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89 sats \ 0 replies \ @mega_dreamer OP 20h \ parent \ on: 📢 Fees are now active on Predyx — here’s why. oracle
Just to give you some insight into how LMSR works and why we needed to add fees:
(Used ChatGPT for readability.)
LMSR (Logarithmic Market Scoring Rule) subsidizes liquidity by design. When a trader moves the market price, the system pays out more to correct predictions than it collects from wrong ones. This makes it great for price discovery — but bad for the house unless there’s high volume.
Take our Bitcoin market as an example:
- We added 30,000 sats in liquidity.
- If the final outcome is heavily one-sided (say, 90% of bets end up correct), we can easily lose 10,000+ sats from that single market.
- That means even with a 2% trading fee, we’d need over 500,000 sats of trading volume just to breakeven.
This is why fees matter — not to make money off traders, but to reduce inevitable losses from subsidizing early, thin markets. We’re actively tuning the fees to the lowest sustainable level.
LMSR is powerful, but it bleeds unless you have consistent volume — and until we get there, fees are the only patch.