Market Liquidity

Liquidity Providers

Liquidity is the foundation of every market on Betify. Anyone can participate as a liquidity provider by contributing collateral to a market’s automated pool, helping sustain price discovery and enabling smoother trading experiences for all participants.

When a user adds liquidity to a pool, they receive ERC-20 liquidity tokens that represent their proportional share of the market. These tokens serve as both proof of contribution and a claim on the pool’s assets. Liquidity providers earn rewards from trading fees and retain a share of any remaining value once the market concludes.

Liquidity can be withdrawn at any time. To exit, the provider simply redeems or “burns” their liquidity tokens to reclaim their share of assets held in the pool.

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Example of Market Liquidity

Consider a market predicting whether BNB will outperform Ethereum up until the end of 2025. An initial deposit of $10 is added to the liquidity pool, creating a balanced position with 10 YES and 10 NO outcome tokens.

As traders begin interacting with the market, they buy and sell outcome tokens at different prices based on their expectations. For instance, if you decide to purchase $10 worth of YES tokens, the automated pricing model mints new YES and NO tokens to fulfill the trade. In this process, the balance of the pool shifts dynamically to reflect updated probabilities.

After you trade, the pool may now hold fewer YES tokens and more NO tokens, changing the implied odds to roughly 80 percent for YES and 20 percent for NO. This shift illustrates how each transaction directly influences the perceived likelihood of an event.

Betify’s liquidity model ensures that every trade, no matter how small, contributes to a living system of market intelligence. The platform continuously adjusts probabilities through real-time supply and demand, transforming participant activity into measurable data about collective belief.

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