What is an LP?
Liquidity Providers (LPs) are the capital backbone of MarkIt. They deposit USDC into market pools, making it possible for traders to take positions. In return, LPs earn fees from every position placed — without having to pick which outcome they think will happen.
LPs Don't Pick Sides
This is the most important thing to understand: LPs do not take directional positions on outcomes. When you deposit USDC as an LP, you're not saying "I think the Rockets will win." You're saying "I think this market will see trading volume, and I want to earn fees from that activity."
The protocol enforces a hard solvency invariant — the contract always holds enough USDC to pay every winning token holder in full. LP capital, combined with the losing side's spent USDC, covers the winners. LPs earn their return from the fee spread on each position, not from the outcome itself.
The Analogy
Think of LPs like a sportsbook operator. The operator doesn't care which team wins any individual game — they profit from the margin built into every transaction. In MarkIt, that margin is the spread: the small amount by which the cost of buying both YES and NO tokens exceeds 1.00 USDC.
Who Should Be an LP?
LP capital works best for participants who:
Believe in market activity — You expect traders to take positions, generating fee revenue
Don't want directional exposure — You'd rather earn from volume than pick outcomes
Can commit capital for the market's duration — LP deposits can only be withdrawn after the market resolves
Understand smart contract risk — Your capital is held by a smart contract for the market's lifetime
How LP Deposits Work
There are two ways to provide liquidity on MarkIt:
LP Vault (Recommended)
The LP Vault at /liquidity is the primary way to LP. Your capital is pooled with other LPs and deployed across multiple markets automatically.
You deposit USDC into the vault
You receive vault shares priced at the current NAV (net asset value) per share
The vault deploys your capital into markets in batches
After markets resolve, the vault collects capital + fees, increasing share price
You request a withdrawal, and it's fulfilled through a FIFO queue as float becomes available
Per-Market Deposits
You can also deposit directly into an individual market's pool:
You deposit USDC into a market's pool
You receive LP shares at a fixed 1:1 ratio ($1 = 1 share)
As traders take positions, the pool collects fees — tracked per-share so early LPs earn more
After the market resolves, you withdraw your capital share plus your earned fee share
The LP Vault is the recommended entry point for most LPs. It diversifies your capital across markets and handles deployment automatically. Per-market deposits are available for LPs who want to target specific markets.
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