Dynamic Spread Engine

The Spread Engine is the operator’s primary revenue mechanism. It determines the buy and sell prices offered to players on every prediction market trade by applying a dynamic markup around the market mid price. Unlike a sportsbook where the house profits only on losing bets, the spread generates revenue on every trade — buys and sells alike.

How It Works

The spread is the difference between the price a buyer pays and the price a seller receives. The mid price reflects the current market consensus, and the spread engine applies a markup above and a markdown below that mid price:

• Ask price (for buyers) — slightly above the mid price. The player pays a small premium to enter a position.
• Bid price (for sellers) — slightly below the mid price. The player receives a little less when exiting a position.

This is a standard mechanism used across financial markets, sportsbooks, and trading platforms to compensate the market maker for providing liquidity and absorbing directional risk.

Dynamic Adjustment

The spread is not a fixed value. It adjusts in real time based on market conditions, protecting operators from adverse scenarios while keeping prices competitive under normal conditions.

Market Volatility

When a market approaches extreme prices — near certainty or near impossibility — the risk profile becomes asymmetric. The spread widens automatically to account for thinner margins and heightened directional risk at price extremes.

Liquidity Conditions

Markets with lower trading activity have less reliable pricing signals. In these cases, the spread widens to compensate for increased uncertainty in the underlying price, ensuring the operator maintains an appropriate edge.

Directional Risk

When the operator has significantly more exposure on one side of a market, the spread can adjust asymmetrically. This makes it slightly more expensive to add to the overloaded side while offering better prices on the opposite side — creating a natural self-balancing incentive.

Operator Configuration

Operators have full control over spread parameters to match their risk appetite and business model:

• Base spread — the default spread applied to all markets.
• Minimum spread — a floor that ensures the operator always earns a minimum edge, even under favorable conditions.
• Maximum spread — a ceiling that caps the spread during extreme widening, keeping prices reasonable for players.

Market-Specific Overrides

Individual markets can have custom spread settings configured via the Operator Dashboard. This allows operators to offer tighter spreads on high-profile markets to attract volume, or wider spreads on exotic or volatile markets to manage risk. All dynamic adjustment factors still apply on top of any market-specific configuration.

Revenue Model

The spread engine generates predictable, consistent revenue for operators through two scenarios:

Round-Trip Trading

When a player buys shares and later sells them, the operator earns the full spread regardless of how the market price moved in between. This is analogous to a market maker’s profit from the bid-ask spread in traditional financial markets.

Market Resolution

When a player buys shares and holds them until the market resolves, the operator earns the spread on the initial purchase. Over a large number of trades, the spread provides a mathematical edge that generates consistent revenue — independent of which outcomes win or lose.

Price Safety

Built-in safety bounds ensure that prices always remain within valid ranges. These are hardcoded safeguards that apply after all spread calculations, so players are always quoted prices that make economic sense.