How Arcomarket works

Every market on Arcomarket is a yes/no question about a price: will an asset be at or above (or at or below) some threshold at a specific time. There's no order book and no market maker. Instead, everyone who bets YES puts USDG into a YES pool, everyone who bets NO puts USDG into a NO pool, and at resolution the winning pool splits what the losing pool leaves behind. This is the parimutuel model, the same structure a horse-race tote board uses.

That has two consequences worth knowing up front. First, there's no house: the protocol never funds a payout out of its own money, so there's no position it can be wrong about, and a new market is tradeable the moment two people, one on each side, have bet. Second, odds are just the pool ratio. If $300 sits on YES and $100 sits on NO, the displayed odds are simply total pool divided by your side's pool: YES is priced at roughly 1.33x (400/300) and NO at 4x (400/100). Watching that ratio move as bets land is the entire pricing mechanism. No oracle is consulted until the market actually settles.

Every market moves through the same stages, in the same order, every time.

1. 1

   Open for bets

   Anyone can stake USDG on YES or NO. The minimum bet is 1 USDG. Odds move with every bet, since they're just the live pool ratio.

2. 2

   Cash-out window (optional)

   Up to 1 hour before the market locks, a bettor can exit early for 80% of their stake. See Cashing out below.

3. 3

   Locked

   At lock time, betting and cash-out both stop. The market sits locked until its resolve time.

4. 4

   Resolved (or voided)

   Once the resolve time has passed, anyone can settle the market from the price feed. A market that ends up one-sided, or whose feed never produces a usable price in time, voids and refunds instead. See Settlement and Grace windows.

5. 5

   Claim

   Winners claim their share of the pool. Refunds from a voided market are claimed the same way. Both are instant and on-chain: nobody approves a claim, there's no dispute window.

Arcomarket's fee (the "vig") is charged only against the losing pool, never against the total money in the market. At resolution:

The standard vig is 4% of the losing pool (markets can set a different rate, up to a 10% cap). Because distributable is always at least as large as the winning pool, a winner can never receive back less than they staked, no matter how lopsided the market was. That's not just a design goal; it's an invariant the contract's test suite checks by brute-force fuzzing across randomized pool sizes and fee settings.

A $100 stake on the winning side comes back as $196: the original stake plus a pro-rata share of the losing pool, minus the fee. Charging the fee on the losing pool instead of the total pool is the specific choice that rules out a winner ever getting back less than they put in, even on a heavily one-sided market.

Markets settle from a Chainlink price feed. The naive way to do this, reading "whatever the price is right now" when someone calls resolve, has a real problem: the window to resolve a market can run for hours. Inside that window, whichever side is currently losing has every incentive to simply wait for the price to cross back over the threshold and resolve at that exact moment, while the winning side has to rush to resolve immediately or risk losing its win. That's a free option for the losing side, not a fair settlement.

Arcomarket closes that option by requiring the first Chainlink price update at or after the market's resolve time, not the latest one. The contract itself checks this on-chain: it confirms the price it's given is timestamped at or after the resolve moment, and that the price immediately before it is timestamped strictly earlier. If both hold, that price is provably the first one available, and there is no other price anyone can substitute. The result: it makes no difference whether a market is settled one second or twenty hours into its window, everyone gets the identical outcome, so there's no price left to shop for.

Every market has a limited window after its resolve time in which it can actually be settled, and that window is sized to the kind of feed it settles from:

If a market can't be settled inside its window, whether the feed never printed a usable price, the keeper had an outage, or trading on the underlying was halted, anyone can void it. A voided market refunds every bettor's full stake. No fee is taken. Refunding, not guessing, is the deliberate response whenever a market can't be settled fairly.

Before a market locks, you can exit a position early instead of riding it to resolution. Three rules govern it:

1. 1

   20% penalty

   You get back 80% of your stake; the other 20% goes to the treasury. Say you'd staked $50: cashing out returns $40, and $10 is kept as the penalty.

2. 2

   Closes 1 hour before lock

   The window shuts an hour before the market locks. This stops someone from watching the price all the way to the wire and then walking a losing stake back out for 80% cents on the dollar right as the outcome becomes obvious, which would otherwise come straight out of the winning side's payout.

3. 3

   Can't be used to void a live, two-sided market

   If a market currently has money on both sides, you can't cash out in a way that would empty one side entirely. Without this, the last bettor on a side could exit, force the market one-sided, and effectively cancel the other side's winning position for a 20% fee. A market that's already one-sided can still be exited freely: it was headed for a void anyway.