Under the hood
PopularityX runs on a purpose-built on-chain ledger and market maker. The Trading page covers what a trader sees; this page is the design underneath, alongside Tokens for the token model.
Based on Hanson's LMSR
The market maker is grounded in Robin Hanson's Logarithmic Market Scoring Rule, a mechanism designed specifically for multi-outcome prediction markets. Hanson's original paper (opens in a new tab) established that a log-scoring rule can be used to create a market maker that prices any number of outcomes simultaneously. The PopularityX AMM builds on that foundation with several extensions required for on-chain perpetual markets.
Constant cost at any size
The implementation is optimised so that the cost of executing a trade does not grow with the number of positions on a board. A board with a hundred positions costs the same to trade against as one with five. This makes large, detailed boards practical on-chain. The exposure standard is the other half of the property: a trade updates one exposure record, not a balance per outcome.
Native Short pricing
Traditional LMSR prices only the Long side of each outcome. The PopularityX AMM is extended to price Short tokens natively. A Short token is a composite of every other Long token on the board, and the AMM prices it as such, with no separate mechanism required and without iterating over the composite tokens.
Liquidity from internal accounting
Opening a new board requires no external capital. The AMM provides liquidity from its own internal accounting, so any board is instantly liquid across every position from day one, with zero external capital.
The solvency guarantee
The guarantee in one line: the ledger guarantees $1.00 backing every full set; the market maker charges at least $1.00 for a full set and puts the $1.00 in the ledger.
A full set is a Long and its Short on the same position. Their two prices sum to $1.00 at every instant, and cash leaves the system only when the two meet in one account, cancel, and release their $1.00. The ledger checks on every trade that one real dollar sits in the market pot for every full set outstanding; a trade that would break that invariant does not execute.
Because boards never resolve, there is no settlement day on which every winning share is paid out at once, and that event is what forces other market makers to hold seeded capital. A board is a single bonding curve over all its positions: every entry is a cash purchase into the curve, every exit is a sale back into it, and a profitable exit is funded, dollar for dollar, by the payments of the traders who moved the price. The pool can never owe more cash than it has taken in: the cashbox is closed.
Expandable boards
New positions can be added to a live board at any time. When a position is added, the AMM prices it as a proportion of Long Other's current share, which decreases accordingly. All other positions are unaffected.