How Hype Market Works

Hype Market is a prediction market. You buy and sell shares whose value depends on the outcome of a future event. If you're right, your shares are worth $1. If you're wrong, they're worth $0.

If you've used a trading platform before, the basics will feel familiar. The difference is that you're not trading tokens — you're trading on outcomes.

---

Shares and Prices

Every market on Hype Market asks a question about the future. Take a simple example:

"Will Bitcoin exceed $150,000 by December 31, 2026?"

This market has two tradable shares: YES and NO.

• If Bitcoin exceeds $150K by the expiry date, YES shares resolve to $1.00 and NO shares resolve to $0.00.

• If it doesn't, NO shares resolve to $1.00 and YES shares resolve to $0.00.

Share prices reflect probability. If YES is trading at $0.35, the market collectively estimates roughly a 35% chance the event happens. If you think that probability is too low, buying YES is a bet that you know something the market doesn't.

The Math Is Simple

You buy 100 YES shares at $0.35 each. Your cost: $35.

• If YES wins: Your shares are worth 100 × $1.00 = $100. Profit: $65.

• If NO wins: Your shares are worth 100 × $0.00 = $0. Loss: $35.

That's it. Your maximum loss is always what you paid.

---

Two Ways to Trade

Classic Conviction Markets

Standard prediction markets with a defined question, outcomes, and a resolution date. These can run for days, weeks, or months. You browse available markets, pick a side, choose your size, and wait — or sell early if your view changes.

Markets cover crypto, politics, sports, culture, and more. Anyone can create a market (see Creating a Market).

Arcade Mode 🗓️ Planned — May 2026

A fast, tap-based interface for short-term price predictions. Instead of an order form, you see a grid of price tiles and tap your prediction. Think: "Where is BTC in 1 hour?"

Arcade sessions run 15–30 minutes. You take multiple quick shots, building streaks at the UI level while all positions settle through the same underlying market engine. Movement Labs' parallel execution makes this possible — trades confirm in about one second.

---

How Prices Move

When more people buy YES, the YES price goes up. When more people buy NO, the NO price goes up. Prices adjust automatically — you don't need to find a counterparty.

Hype Market uses a pricing engine called LS-LMSR that manages liquidity behind the scenes. What this means in practice:

• You can always trade. The protocol is always ready to buy or sell, even in small or niche markets.

• Prices adjust smoothly. No sudden gaps or stuck orderbooks.

• Liquidity grows with activity. The more a market is traded, the tighter the spreads become.

💡 Think of share prices as probabilities. YES at $0.65 means roughly 65% chance. If you disagree, that's your edge.

Advanced (Optional): LS-LMSR Mechanics

Hype Market uses the Liquidity-Sensitive Logarithmic Market Scoring Rule (LS-LMSR). It's an adaptive bonding curve where:

• Cost function: C(q) = b · ln(Σ e^(q_i/b)), where q is the vector of outstanding shares per outcome and b is the liquidity parameter.

• Price of outcome i: p_i = e^(q_i/b) / Σ e^(q_j/b) — the partial derivative of the cost function.

• Key innovation: In Hype Market's implementation, b increases with cumulative trading volume. Liquidity concentrates where demand actually exists.

Why not a standard AMM? A constant-product AMM (x·y=k) spreads capital across the entire price range. In a 90/10 market, most capital is idle at prices nobody trades. LS-LMSR focuses liquidity at the current price, delivering lower slippage per trade — especially in niche, low-volume markets.

---

How Markets Resolve

Hype Market uses a hybrid AI + human resolution system designed to solve what's known as the resolver trilemma: the trade-off between decentralization, security, and efficiency that plagues traditional prediction market oracles.

Instead of relying on a single oracle feed or a token-weighted vote (which can be manipulated by whales), Hype Market's oracle combines two layers:

Layer 1: AI Resolver Agent (~99% of Markets)

When a market's resolution date arrives, an AI Resolver Agent automatically:

1. Queries multiple data sources defined by the market creator (price feeds, official results, structured data, event triggers)

2. Cross-references sources and independently reaches a resolution

3. Publishes the resolution on-chain with a cryptographic signature, including the full audit trail — every data source used and the reasoning applied

Most markets resolve this way within minutes. No human intervention, no waiting.

Challenge Period (Dynamic)

After the AI resolves, a challenge period begins. During this window, anyone who believes the AI got it wrong can dispute the resolution by staking a bond.

Here's the key: the challenge period isn't one-size-fits-all. Its parameters scale dynamically based on the market:

Parameter	Small / Clear-Cut Markets	Large / High-Stakes Markets
Challenge duration	Shorter	Longer
Bond required to dispute	Smaller	Larger
Juror panel size (if disputed)	Smaller	Larger

If nobody challenges during the window, the AI resolution becomes final and winning shares can be redeemed.

Layer 2: Decentralized Court (Disputed Markets)

If someone does challenge, the Decentralized Court activates. This is the human fail-safe for edge cases:

1

Juror selection

A panel of jury members is selected through randomized, reputation-weighted assignment — you can't buy your way onto the jury.

2

Commit-reveal voting

Jurors submit their votes in a sealed commit phase, then reveal after all votes are locked. This prevents jurors from being influenced by the majority.

3

Quadratic voting

Influence scales with the square root of stake, not linearly. This makes it exponentially expensive for any single actor or colluding group to capture the outcome — directly addressing the whale-manipulation vulnerability seen in other prediction market oracles.

4

Economic incentives

Both the challenger and the original resolution must be backed by equivalent bonds. Honest actors gain forfeited bonds from dishonest ones. Valid challenges are rewarded; frivolous ones are penalized.

The court's decision becomes the final resolution, published on-chain.

💡 Why this matters: Traditional oracle systems force you to choose two of three: decentralized, secure, or fast. Hype Market's oracle sidesteps this by using the fast AI layer for the ~99% of clear-cut cases and reserving the fully decentralized, secure court for the ~1% that need human judgment. Each market gets the optimal trade-off automatically.

After Resolution

• Winning shares can be redeemed for $1.00 each

• Losing shares are worth $0.00

• Redemptions go directly to your Hype Market account balance

• The full resolution record (data sources, reasoning, and any dispute history) is permanently available on-chain

---

Multi-Outcome Markets

Not every question is YES/NO. Hype Market also supports markets with multiple options.

Example: "Which AI company will have the highest market cap by end of 2026?"

• Option A: Nvidia

• Option B: Microsoft

• Option C: Google

• Option D: Other

You buy shares in the outcome you believe in. All share prices across options sum to approximately $1.00. Only the winning option pays out.

---

You Don't Have to Wait

You can sell your shares at any time before the market closes, at the current market price. This lets you:

• Take profit early if prices have moved your way

• Cut losses if your view changes

• React to breaking news or new information

You're never locked in.

---

FAQ

Can I lose more than I put in?

No. Your maximum loss is the amount you paid for your shares. There are no margin calls or liquidations.

How fast do trades confirm?

About one second on Movement Labs, with gas costs typically under $0.01.

What tokens can I use to trade?

Stablecoins (USDC, USDT), yield-bearing stablecoins (USDY, USDe), MOVE, and partner tokens. See Supported Tokens & Yield.

Who creates the markets?

Anyone. Hype Market is permissionless — users create and seed their own markets. See Creating a Market.

What if a market's resolution is disputed?

Anyone can challenge an AI resolution by staking a bond during the challenge period. If challenged, a Decentralized Court with randomly selected, reputation-weighted jurors uses quadratic voting with commit-reveal to reach a final decision. Valid challenges are rewarded; frivolous ones are penalized.