How LMSR pricing works
By YesNo.fans editorial team · Updated
LMSR-style pricing lets the platform quote YES and NO prices automatically. Prices move with demand and the market’s liquidity level.
Automated market making
Instead of waiting for another trader to take the opposite side, LMSR-style pricing gives a quote from the market engine. The quote changes as traders buy or sell.
Why not an order book
An order book needs a buyer and a seller at the same price at the same time. Many prediction markets have few participants, so an automated quote means you can usually trade immediately, at a price that reflects the market state.
Liquidity controls price movement
Higher liquidity generally makes prices move more slowly. Lower liquidity makes prices respond faster to each trade. Safety limits may reduce or block trades that would create excessive price movement or risk.
- Small trades usually move the price less than large trades.
- Before you confirm, the quote shows the estimated shares, price, fees, and amount you will spend or receive.
- Safety limits may reduce the allowed trade size or block a quote.
Why the quote can differ from a simple percentage
The displayed probability and the final quote are related, but a new trade can move the market. Always review the final cost or receive amount before confirming.