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Pricing Model

Beforehand uses a parimutuel pricing model, not a constant product or order book system.

How Parimutuel Works​

Basic Concept​

  • All trades go into pools (YES pool and NO pool)
  • Prices = pool size / total pool × 100
  • Winners split the total pool proportionally

Example​

  1. Market starts: $5 YES, $5 NO (50/50)
  2. Someone adds $3 to YES: $8 YES, $5 NO
  3. New prices: 61.5% YES, 38.5% NO
  4. If YES wins: All YES traders split $13 pool proportionally

Key Characteristics​

  • Dynamic pricing: Prices change with every trade
  • No early selling: You can't exit before resolution
  • Proportional payouts: Based on contribution, not entry price
  • Pool-based: All money in pools, no external liquidity

Fee Structure​

  • No fees at entry: Full trade amount goes into pool
  • Fees on winnings: 5% fee applied when you win
  • Scaling fees: Large trades may pay higher fees (up to 50% cap)

Mathematical Model​

Prices are calculated as:

YES Price = (YES Pool / Total Pool) × 100
NO Price = (NO Pool / Total Pool) × 100

Payouts are calculated as:

Your Payout = (Your Contribution / Total Winning Contributions) × Total Pool × (1 - Fee Rate)

This ensures:

  • Early traders get no advantage
  • Fair distribution based on contribution
  • Fees only on winnings, not entry