Understanding Prices

Prices on MarkIt reflect the market's collective view of how likely each outcome is. This page explains how to read them and what drives them.

Prices as Implied Probability

A YES token priced at 0.65 USDC means the market implies a 65% chance that YES is the correct outcome. A NO token at 0.36 USDC implies a 36% chance for NO.

This works because winning tokens pay out 1.00 USDC. If you pay 0.65 for a token that either pays 1.00 or 0.00, you're implying a 65% chance of payout — otherwise, the expected value wouldn't justify the price.

Why Prices Don't Sum to Exactly 1.00

You'll notice that YES price + NO price is always slightly more than 1.00 USDC. For example:

• YES: 0.65 USDC

• NO: 0.36 USDC

• Total: 1.01 USDC

That extra 0.01 is the spread. It includes two components: a dynamic LP fee (typically 0.25–5% depending on skew) that stays in the pool and accrues to LPs, and a flat 2% protocol fee that goes to the protocol treasury. Both are deducted from your USDC before tokens are purchased.

How Skew Affects Pricing

MarkIt uses skew-based dynamic pricing. The core principle: the more popular a side becomes, the more expensive it gets.

Balanced Market

When demand is roughly equal on both sides:

• YES ≈ 0.50 USDC

• NO ≈ 0.50 USDC

One-Sided Demand

When most positions are on YES:

• YES price increases (e.g., 0.72 USDC) — the crowded side gets more expensive

• NO price decreases (e.g., 0.29 USDC) — the contrarian side gets cheaper

This serves two purposes:

1. Price discovery — Prices naturally converge on the market's best estimate of probability

2. Incentive balancing — Cheaper contrarian positions attract risk-takers who disagree with the majority, helping balance the pool

Dynamic Fees

The fee also varies with skew:

• Crowded side: Higher fees (up to ~5%) — taking the popular position costs more

• Contrarian side: Lower fees (as low as 0.25%) — going against the crowd is cheaper

This further incentivizes balanced flow and rewards contrarian conviction.

Price Movement During Large Positions

When you take a large position, the price moves as your order fills. MarkIt uses piecewise integration — your order is split into 16 steps, each priced at the current mark price. This means:

• Small positions fill close to the displayed price

• Large positions pay a progressively higher price per token as they shift the market

• Your effective price (shown in the trade form) reflects the actual average cost across all steps

This prevents any single position from draining value at a stale price.

For the technically curious: The pricing function is a capital-aware rational curve. The mark price adjusts based on the imbalance between YES and NO liabilities, normalized by the total pool backing. The formula ensures prices stay between 0.01 and 0.99 USDC and respond smoothly to changes in demand. See Pricing and Skew for the full model.