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Market Mechanics

Deep dive into how MemeMarket's prediction engine works under the hood. Understand the AMM bonding curves, oracle integrations, and settlement logic.

Market Mechanics

Every market on MemeMarket is a binary outcome market. This means there are only two possible states at expiration: YES or NO.

The core equation governing all markets is:

Price(YES) + Price(NO) = $1.00

This relationship always holds true. If the market thinks there is a 70% chance of YES, then YES shares will trade at $0.70 and NO shares at $0.30.

AMM & Liquidity

MemeMarket uses a customized Constant Product Market Maker (CPMM), similar to Uniswap but optimized for prediction shares.

Why an AMM?

Traditional order books struggle with liquidity on niche markets. An AMM ensures you can always buy or sell, even if there isn't another user on the other side of the trade right now. The AMM acts as the counterparty.

Liquidity Providers (LPs)

Users can deposit SOL into market pools to become LPs. LPs earn trading fees but take on the risk of "impermanent loss" if the market moves significantly one way. In prediction markets, LPs profit most from volume and volatility where prices oscillate rather than trending in a straight line.

Resolution Sources (Oracles)

We prioritize objective, on-chain truth. MemeMarket aggregates price data from multiple high-integrity sources to determine market outcomes.

Pyth Network

High-fidelity, sub-second price feeds used for major assets like SOL, BTC, and top-tier memecoins.

Switchboard

Customizable oracle feeds that allow us to resolve markets for newer, long-tail memecoins.

DEX TWAP

Time-Weighted Average Prices directly from Raydium and Orca pools for the most granular data.

Market Types

  • Price Threshold Markets

    "Will Token X be above $Y at time T?" - The most common type. Simple and objective.

  • Market Cap Markets

    "Will Token X reach $100M Market Cap?" - Useful for comparing relative performance of tokens.

  • Flipper Markets

    "Will Token A have a higher price than Token B?" - Direct head-to-head battles between communities.

Dispute Resolution

In 99% of cases, oracles resolve markets automatically. However, edge cases exist (e.g., flash crashes exactly at expiration, oracle exploits).

MemeMarket implements a localized UMA (Optimistic Oracle) fallback.

  1. Anyone can bond SOL to dispute an incorrect resolution.
  2. The dispute is escalated to token holders (MemeMarket DAO).
  3. Token holders vote on the correct outcome.
  4. Honest voters and the disputer are rewarded; malicious reporters are slashed.