How it works

This page covers the mechanics, to help you understand where every number on the page comes from. If you don’t want the details, just reading the bold conclusion at the start of each section is enough.

How prices are set: LMSR

XSeers prices using an automated market-making algorithm called LMSR (Logarithmic Market Scoring Rule), so you can buy and sell anytime without a counterparty.

Each outcome has an internal “holding amount” q, and the price (i.e. the implied probability) is computed from it:

priceᵢ = exp(qᵢ / b) ÷ Σ exp(qⱼ / b)

• All outcome prices in an event add up to exactly 100%, which you can read as “how favored each outcome currently is.”
• b is the pool’s liquidity parameter: the larger b is, the “heavier” the price, and the less the same bet pushes it; the smaller b is, the more sensitive the price.
• When you buy an outcome, its q increases, so its price rises and the others fall. The more you buy, the more you push the price yourself, so your average fill price will be higher than the price you saw when you clicked in (this is slippage).

LMSR has an upside: the market maker’s maximum loss is bounded (about b × ln(number of outcomes)), so the pool can’t be arbitraged infinitely.

Betting: how your money becomes shares

• Your USDT enters the pool in full, and buying charges no fee.
• The system calculates the most shares this money can buy at the current price (rounded down): the lower the price, the more shares the same money buys.
• Your bet amount is recorded as your protected principal on this side, and exit and settlement are calculated from it.

Switching: moving a bet from one side to another

In the contract, switching is actually three steps:

1. Sell your old outcome’s shares at the current price, getting some money.
2. Deduct a fee (the same set as exit: 2%–30%, depending on the pool’s funding situation).
3. Use what’s left to buy the new outcome’s shares at the current price.

Because both sides’ prices are moving, the number of shares that moves over changes; and the principal protection already lost on the old side does not carry over to the new side, so that loss is locked in.

Exiting: pulling back part early

• The sell amount is calculated at LMSR’s current sell price (called “market value” below).
• What you can actually get back is min(market value, the principal of this portion):
  • On paper you’re up → only principal is returned, the paper gain stays until settlement when you may get it;
  • On paper you’re down → you exit at the lower market value and bear the loss yourself.
• Then a 2%–30% exit fee is deducted (2% when the pool is healthy, higher the more short it is).
• A single exit takes at most 30% of the pool’s distributable balance — if the amount is too large, do it in several rounds.

What winners care about most: how your money changes

At settlement, those who got it right receive two parts:

you receive   = your principal + share × profit pool
profit pool   = the losing side's money − platform settlement fee
share         = your winning shares ÷ all winning shares

• How much you can earn: the upper bound is the entire losing pool (after fees) split among all winners by shares. The more shares you have, the fewer total shares on the winning side, and the more the losers put in, the more you get.
• How much you can lose: if you got it wrong, your side’s principal goes into the profit pool and is split among the winners, and you can’t get it back at settlement — you lose at most the principal you put in. You can exit mid-way to cut losses, but exit returns at most principal, charges a fee, and on the losing direction it’s at the lower market value.
• Where the earned money comes from: it comes from the losing side’s principal. This is a redistribution among participants; the platform only takes a fee — it is not the platform’s own money. Winners’ principal is always protected, and the fee is not deducted from winners’ principal.

How much the platform charges

Stage	Who pays	How much
Buy	—	No fee
Switch / Exit	The person acting	2%–30%, higher the more short the pool is (2% when healthy)
Settlement	The losing side	A platform settlement fee, deducted from the losers’ money, with the rest split among the winners

How to create a prediction

The entry for creating a prediction is in the user menu: first apply for create permission from the user menu, and once it’s granted you can create a prediction from the user menu. The exact form-filling flow follows what’s on the page.

When a prediction receives its first valid bet, the contract automatically sets up its market and pool.