Mathematics (The Quant Section)

LMSR (Logarithmic Market Scoring Rule)

Unlike standard order books which require a counterparty for every trade, CogniFi uses an Automated Market Maker (AMM) specifically designed for prediction markets. We utilize the Logarithmic Market Scoring Rule (LMSR).

LMSR provides infinite liquidity at varying price points. It ensures that a user can always buy a "YES" or "NO" share, even if no other users are currently selling.

Liquidity Depth and Slippage Models

The parameter is critical for market stability.

  • Dynamic : In CogniFi, the liquidity parameter is not static. It grows as fees are collected.

  • Fee Injection: A portion of the trading fees is added to the market liquidity pool. This automatically increases , making the market harder to manipulate as it matures.

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