How Prices Are Calculated
Oyrade uses proven AMM mechanics for fair, liquid markets.
The LMSR System
We use Logarithmic Market Scoring Rule (LMSR)-the same algorithm powering Polymarket's $2B+ in volume.
Why LMSR?
| Feature | Benefit |
|---|---|
| Always liquid | Trade any size, anytime |
| Bounded loss | Market maker risk is capped |
| Efficient prices | Reflects true probability |
| Smooth curves | No sudden price jumps |
Price Formula
For a binary market with YES/NO shares:
Price(YES) = e^(q_yes/b) / (e^(q_yes/b) + e^(q_no/b))
Where:
q_yes= quantity of YES shares outstandingq_no= quantity of NO shares outstandingb= liquidity parameter (controls price sensitivity)
Don't worry about the math-the UI shows you real-time prices.
How Prices Move
When you buy shares:
- Buying YES → YES price increases, NO price decreases
- Buying NO → NO price increases, YES price decreases
The more you buy, the more the price moves against you (slippage).
Slippage Example
Starting price: YES = $0.50
| Buy Amount | Execution Price | Ending Price |
|---|---|---|
| 10 shares | $0.51 | $0.52 |
| 100 shares | $0.55 | $0.60 |
| 1000 shares | $0.65 | $0.75 |
Reduce Slippage
- Break large orders into smaller trades
- Wait for others to trade against you
- Use limit orders when available
Understanding the Spread
The difference between YES + NO prices represents:
- Trading fees (0.2% to protocol)
- Market maker premium
- Uncertainty cost
Typical spread: 1-3% (tighter than most DEX swaps).
Pump.fun Market Caps
For Pump.fun token markets, prices are derived from:
Market Cap = Token Price × Circulating Supply
Oracles (Switchboard) provide real-time MC data from DEX liquidity.