Pool Payout Calculation

Overview

Participants on our platform can take position on the performance of two competing tokens, Token A and Token B, within a set timeframe. To ensure fairness, our payout method employs an "Equalizing Multiplier" and a "Max Payout Cap." These mechanisms adjust the winnings based on each pool's size and cap the maximum possible payout to the total of the opposing pool, ensuring no stakeholder risks more than they have committed.

Pool Payout Calculation Steps

The payout calculation follows these detailed steps:

1. Determine Winning and Losing Tokens At the close of the market period, we assess the price returns % of each token. The token with the higher increase (or smaller decrease) is identified as the winner, the other as the losing token Price Return % of Token = (Close Price/Initial Price) - 1

2. Calculate Relative Outperformance of the Winning Token We begin by calculating the relative outperformance as a percentage, determining how much better the winning token performed compared to the losing token within the defined timeframe, using the formula: Relative Outperformance % = (1 + Price Return % of Win Token)/(1 + Price Return % of Lose Token) - 1

Example	Initial Price	Close Price	Win/Lose	Relative Outperformance
Token A	$1.00	$0.95	LOSE
Token B	$0.10	$0.10	WIN	+5.26%

1. Calculate Gross ROI % with Leverage Multiplier (if applicable) Once the Relative Outperformance % of the winning token is determined, the Gross ROI % is calculated by multiplying it with the leverage multiplier set for the pool, using the formula: Gross ROI % = Relative Outperformance % (of the winning token) x Levearge Multiplier

2. Applying the Equalizing Multiplier It's essential to consider both the relative performance of the tokens and the amount staked in each pool. If one pool has significantly more stake than the other, it would unfairly skew the payout if we didn't take that into account. To address this, we calculate the Equalizing Multiplier by dividing the size of the smaller pool by the size of the larger pool. This ensures that the payout is adjusted proportionately based on the sizes of the two competing pools. We adjust for the pool size disparity by calculating: Equalizing Multiplier: Smaller Pool Size / Larger Pool Size

Glossary: Equalizing Multiplier

Definition: The Equalizing Multiplier is a regulatory mechanism used in prediction trading markets to ensure fairness and competitive balance between different-sized betting pools. It adjusts the payout percentages to account for disparities in pool sizes, making the competition more about strategic decision-making rather than capital dominance. Purpose: The primary purpose of the Equalizing Multiplier is to mitigate the advantage that larger pools might have simply due to their size. By adjusting the payouts based on the relative sizes of the competing pools, the multiplier ensures that returns on investments are proportionate to the risks and strategies employed, rather than the absolute amount of money staked. Application: It is applied uniformly to both the larger and smaller pools in a competing scenario, regardless of which pool wins. When a pool wins, the payout percentage is adjusted by the Equalizing Multiplier, which is calculated as the ratio of the smaller pool's size to the larger pool's size. This adjusted payout reflects a fair distribution of winnings, proportional to the size of the opposing pool.

Example: Imagine two competing pools

• Pool A (Token A) has $50,000 total stake in it (smaller)

• Pool B (Token B) has $100,000 total stake in it (larger)

Equalizing Multiplier = Smaller Pool Size / Larger Pool Size = $50,000 / $100,000 = 0.5 If Pool A wins, and the outperformance is 10% (no leverage in this example), then the adjusted payout would be 1% (10% x 0.10), instead of 10%. This reduces the impact of the larger pool’s size on the final payout outcome, creating an equitable trading environment. Purpose: The Equalizing Multiplier adjusts payouts to make sure they are proportional to the amount bet, rather than allowing the total size of a pool to determine the winnings outright. This is particularly important in the game where two tokens compete against each other, and payouts are determined by their relative performance. Significance: Equalizing Multiplier is essential for maintaining fairness in our decentralized platform, ensuring that all participants have an equitable opportunity to profit based on their strategic insights, not just the size of their bets. It fosters a dynamic market where strategic decision-making prevails over capital, enhancing inclusivity and active engagement.

1. Calculate the Adjusted Payout Then, apply the Equalizing Multiplier to the Gross ROI % to derive the Adjusted Payout %. This essential step ensures that the total payout aligns with the relative investment risks assumed by each pool. Adjusted Payout % = Gross ROI % x Equalizing Multiplier This approach helps mitigate the impact of large discrepancies in the sizes of the competing pools, preventing scenarios where a much larger pool overwhelms a smaller one simply due to its total stake size.

Glossary: Adjsuted Payout %

Adjusted ROI%: This percentage is initially calculated based on the performance differential between the two pools, magnify by the leverage multiplier defined if any (Gross ROI%), and then modified by the Equalizing Multiplier. It represents the theoretical return on investment for the winning pool based on performance metrics.

1. Calculate Final Payout The Total Payout to the winning pool is determined by multiplying the Adjusted Payout % by the total stake in the pool. This step quantifies the actual payout that will be distributed among the winning participants. Total Payout = Adjusted Payout % x Size of Pool

2. Apply the Max Payout Cap The platform ensures that the Total Payout never surpasses the total stakes in the losing pool. This cap is crucial to prevent any payout from exceeding the maximum potential loss represented by the size of the opposing pool’s total stakes, safeguarding the interests of all participants.

   Example: Let's say Pool A (Token A) has a total stake of $50,000, and Pool B (Token B) has a total stake of $100,000. The max payout percentage is determined by dividing the total stake of the opposing pool by the total stake of its own pool.

   Therefore, for Pool A (Token A), the max payout percentage is 200% ($100,000 / $50,000), and for Pool B (Token B), the max payout percentage is 50% ($50,000 / $100,000). If Token B outperforms Token A and the calculated Adjusted Payout % is, let's say, 60%, exceeding the max payout cap, the final Total Payout is capped at 50% x Size of Pool.

Glossary: Max Payout Cap

Purpose: This cap ensures that even if the Adjusted ROI% suggests a very high payout, the actual payout cannot exceed what the losing pool has staked. This cap is typically defined as a ratio of the losing pool's size to the winning pool's size.

Calculation: By defining the maximum payout as a percentage calculated by the ratio of the size of the opposing pool to the size of its own pool, we ensure that the winnings are never more than what the opposite pool has staked. This is a method to keep the payouts within a sustainable range — participants cannot win more than their opponents have to lose. Application: Before applying this adjusted ROI% to the losing pool's size, ensure it does not exceed the Max Payout percentage established. For instance, if the calculated adjusted ROI% for Pool A is 150% but their Max Payout is capped at 200%, then 150% is acceptable. However, if it were 250%, you'd cap it at 200%. Example: Suppose Pool A wins against Pool B, and the Adjusted ROI% is 120%. Let's also say that Pool A's stake is $50,000 and Pool B's stake is $100,000. The Max Payout Cap for Pool A would thus be 200% (since $100,000 / $50,000 = 2, or 200%).

• Adjusted Payout: 120% of Pool B’s $100,000 is $120,000.

• Applying the Max Payout Cap: The cap of 200% of Pool A's own stake ($50,000) would allow a maximum of $100,000 payout ($50,000 * 2 = $100,000). Since $120,000 (Adjusted ROI%) exceeds $100,000 (Max Payout Cap), the Final payout is $100,000.

Pool Payout Calculation Example

The payout calculation example for reference: here

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Continuous Improvement Commitment

We are dedicated to refining and enhancing our platform to ensure fairness, simplicity, and user satisfaction. To achieve this, we regularly review our payout mechanisms, including the "Equalizing Multiplier" and "Max Payout" cap, to prevent manipulation and adapt to market changes. We also focus on simplifying complex calculations for better user understanding and are committed to using robust and reliable data sources for token valuation. User feedback is at the core of our ongoing efforts to maintain integrity and provide an appealing and engaging experience for all participants.

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FAQs

1. Why do the Total Payout percentages differ between smaller and larger pools, and how is fairness ensured? In our platform, the Total Payout percentages can vary between smaller and larger pools due to the application of the "Equalizing Multiplier," which adjusts payouts based on the relative sizes of the competing pools. This is designed to ensure that payouts are fair and proportionate to the amount at stake, considering the pool size disparities.

   Here's a breakdown of how this works and how fairness is addressed:

   1. Equalizing Multiplier: This multiplier, calculated as the ratio of the smaller to the larger pool, balances payouts so larger pools don’t unfairly dominate the game.

   2. Maximum Payout Cap: To manage risks and prevent destabilizing losses, payouts are capped so that they never exceed a predetermined proportion of the losing pool’s stakes.

   3. Perceived Fairness: While the mathematical model ensures risk is proportional to stakes, perceptions of fairness may vary. Smaller pools can experience a higher relative return on investment upon winning, due to adjusted payout percentages. This approach prevents larger pools from dominating the game and helps maintain competitive balance.

   4. Potential Improvements and Transparency: We regularly review and refine our payout formula based on users feedback and provide clear explanations to ensure all participants understand and find the system fair.

   These mechanisms maintain a balanced and enjoyable betting environment, protecting the integrity and competitive nature of the game.

2. Is it more favorable to stake in the smaller pool?

   It might initially seem that staking in the smaller pool is more favorable due to potentially higher returns as a percentage of ROI when that pool wins. This is influenced by the "Equalizing Multiplier," which adjusts payouts to balance impacts of pool size differences, typically resulting in higher gains for the smaller pool. However, several mechanisms ensure overall fairness and discourage disproportionate favoritism:

   1. Consistent Loss Percentages: The system ensures that the percentage of total stakes lost (Total Payout ROI %) is consistent for each losing pool, whether it being larger or smaller. This design ensures that losses are proportionately equal across all pools, effectively mitigating the risk of disproportionate ROI impacts due to pool size differences.

   2. Equalizing Multiplier: This adjusts payouts based on the relative sizes of the pools, helping to balance the impact so that larger pools don’t unfairly dominate the game. It boosts the ROI for smaller pools when they win, maintaining competitive balance rather than giving an inherent advantage.

   3. Maximum Payout Cap: Ensures that total payouts do not exceed the stakes of the opposing pool, preventing scenarios where excessive returns could destabilize the game's economic balance.

   4. Strategic Game Dynamics: The perceived benefits of staking in a smaller pool are offset by risks and actual token performances. Higher returns are contingent on token success, adding

   5. Regular Monitoring and Adjustments: Our platform continuously monitors staking patterns and outcomes allows for necessary rule adjustments, ensuring no pool size gains an unfair advantage and maintaining adaptability.

   While initial impressions might suggest that smaller pools offer better potential returns due to higher Total Payout ROI %, this advantage is balanced by game mechanics and the performance of the tokens involved. Our system's design ensures fair play and encourages strategic decision-making across all pool sizes.