Example Scenario

Example Scenario: "Will SOLUSDT reach $100 by the end of the month?"

This scenario demonstrates market creation, trading dynamics, fees, and payouts on the Mammoth platform.

1. Market Creation:

   • Alice creates the market, paying a 0.1 SOL creation fee

   • Initial price for both YES and NO tokens: 0.1 SOL

2. Early Trading:

   • Bob buys 10 SOL worth of YES tokens

   • Trading fee: 0.01 SOL (0.1% of 10 SOL)

   • Bob receives 99.9 YES tokens (10 SOL - 0.01 SOL fee = 9.99 SOL, divided by 0.1 SOL per token)

   • YES token price increases to 0.15 SOL

   • NO token price decreases to 0.075 SOL

3. Mid-Market Trading:

   • Charlie buys 10 SOL worth of NO tokens

   • Trading fee: 0.01 SOL

   • Charlie receives about 132.53 NO tokens (9.99 SOL / 0.075 SOL per token)

   • Prices stabilise: YES at 0.14 SOL, NO at 0.11 SOL

4. Late Trading:

   • David buys 10 SOL worth of YES tokens

   • Trading fee: 0.01 SOL

   • David receives about 71.35 YES tokens (9.99 SOL / 0.14 SOL per token)

5. Market Resolution:

   • SOLUSDT reaches $100, YES wins

   • Total pool: 30 SOL

   • Total trading fees collected: 0.03 SOL

6. Redemption and Payouts:

   • Bob redeems 99.9 YES tokens

     • Gross payout: 14.985 SOL

     • Winning bet fee: 0.014985 SOL (0.1% of gross payout)

     • Net payout: 14.97 SOL (49.7% profit)

   • David redeems 71.35 YES tokens

     • Gross payout: 10.7025 SOL

     • Winning bet fee: 0.0107025 SOL

     • Net payout: 10.69 SOL (6.9% profit)

   • Charlie's 132.53 NO tokens become worthless

7. Market Creator Payout:

   • Alice (market creator) receives 1% of the final pool

   • Creator payout: 0.3 SOL (1% of 30 SOL)

8. Platform Revenue:

   • Market creation fee: 0.1 SOL

   • Trading fees: 0.03 SOL

   • Winning bet fees: 0.0256875 SOL

   • Total platform revenue: 0.1556875 SOL

This example illustrates:

• How fees are applied at different stages (market creation, trading, winning bet redemption)

• The market creator's incentive (1% of the final pool)

• Early participants (Bob) have higher profit potential but more capital at risk

• Contrarian bets (Charlie) can be incentivised by price imbalances

• Late participants (David) can still profit, but to a lesser degree

• The platform generates revenue from various fees

• The mechanism encourages active trading and price discovery throughout the market's lifetime