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For Market Creators

As a PAMM market creator, you are the house. Your capital deposit becomes the market’s liquidity backbone. You don’t receive tokens — your collateral IS the pool. This page covers everything a creator needs to know.

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Creating a Market

To create a PAMM market, you call createPredictionMarket on the PNPFactory contract with:
ParameterDescription
initialLiquidityCollateral amount to deposit (e.g. 10,000 USDC)
collateralTokenThe ERC-20 token used for trading (e.g. USDC, WETH)
questionThe prediction question
endTimeUnix timestamp when the market closes
What happens:
  1. Your collateral is transferred to the PNPFactory contract
  2. The reserve R is set to your deposit amount
  3. You receive zero tokens — your capital becomes the virtual liquidity depth
  4. The market is immediately tradeable at 50/50
Creator deposits 10,000 USDC
→ R = 10,000
→ V_YES = 10,000,  V_NO = 10,000
→ price_YES = 50%,  price_NO = 50%
→ Market is LIVE
That’s it. One transaction, instant market.

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Why You Get Zero Tokens

If you received tokens at creation, those tokens would count in S_YES or S_NO, destroying the virtual liquidity: 
If creator got 10,000 YES tokens:
  R = 10,000
  S_YES = 10,000
  V_YES = R - S_YES = 0  ← Pool is dead. No liquidity.
Your capital must be fully absorbed into the virtual pool. It IS the pool. Your 10,000 USDC makes V_YES = V_NO = 10,000 possible.

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How You Make Money

Creators earn through three channels:

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1. Take Fees (Compound in Reserve)

Every trade has a 1% take fee that stays inside the reserve. This grows R over time without minting additional tokens. Since your economic exposure is tied to what remains in R after settlement, every trade makes the reserve slightly deeper — benefiting you. After 100 trades averaging 1,000 USDC each: 
Take fees accumulated: ~980 USDC
This is now part of R, increasing your claim on remaining reserve.

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2. Remaining Reserve After Settlement

When the market resolves and all winners redeem, whatever is left in R goes back to you. This includes:
  • Your initial deposit (if not fully consumed by winners)
  • Accumulated take fees
  • Collateral from the losing side that wasn’t claimed by winners

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3. Protocol Fee Split (50%)

A separate 1% protocol fee is collected on every trade and sent to the FeeManager contract. After the market’s end time, this fee pool is split 50/50 between you and the protocol.

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Creator Revenue Example

Market: 10,000 USDC initial deposit
Trading volume: 50,000 USDC buys + 30,000 USDC sells

Protocol fees collected: ~800 USDC total
  → Creator's share: 400 USDC (claimable from FeeManager)

Take fees in reserve: ~490 USDC (compounding in R)

If market is balanced and resolves:
  → Creator recovers initial deposit + take fees + losing side leftover
  → Net profit: 400 USDC (protocol fees) + portion of remaining reserve

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Your Risk Profile

The creator bears directional risk. If the market is heavily one-sided and the favored side wins, you can lose your entire deposit.

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Best Case: Balanced Market

Both sides trade roughly equally. Fees accumulate. After settlement, the losing side’s collateral partially remains in the reserve. You recover your deposit plus profit. 
Balanced market, 10K initial, YES wins:
  Reserve grew to 20,200 from trading + fees
  YES holders claim 18,000
  Remaining: 2,200 → creator claims
  Net: -10,000 + 2,200 + 400 (protocol fees) = -7,400

Wait — in this scenario the creator still loses? Let's be precise.
The math depends on the exact ratio. Here’s the honest breakdown:

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Scenario: One-Sided Market (Everyone Buys YES, YES Wins)

Initial: R = 10,000 (your deposit)
Trading: +3,000 from YES buyers
Final R: 13,000

YES wins. All 13,000 goes to YES holders.
Creator gets: 0 + protocol fee share
Loss: -10,000 + ~30 (fee share) = -9,970
You were effectively the implicit NO side, and you lost.

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Scenario: One-Sided Market (Everyone Buys YES, NO Wins)

Final R: 13,000
S_NO = 0 — no NO tokens exist

No one can redeem. Creator calls claimRemainingReserve().
Creator gets: 13,000 + protocol fee share
Profit: +3,000 + ~30 = +3,030
You pocketed the YES buyers’ collateral. You were the implicit NO side and won.

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Scenario: No Trading Activity

R = 10,000, S_YES = 0, S_NO = 0
Market expires. Creator claims full reserve.
Profit: 0 (capital returned in full)

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Risk Summary

ScenarioCreator Outcome
Balanced market, either side winsModerate profit from fees + remaining reserve
One-sided, favored side winsLoss up to 100% of deposit
One-sided, underdog winsSignificant profit
No trading activityCapital returned in full
You are short volatility and long balanced markets. The more evenly split the trading activity, the better your outcome.

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Why PAMM Is the Best Bootstrappable Model

If you’re looking to spin up prediction markets quickly, PAMM solves the problems that kill other models:

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No Chicken-and-Egg Problem

Traditional AMMs need LP tokens with both sides deposited. PAMM needs one deposit. Done.

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No Market Maker Needed

Order books require active market makers placing bids and asks. PAMM provides continuous liquidity algorithmically. Traders can buy and sell 24/7 without anyone on the other side.

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Instant Activation

One transaction creates a fully functional, continuously tradeable market. No waiting for liquidity providers, no minimum participation threshold.

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Predictable Liquidity Depth

Your deposit directly controls how tight the spreads are. Deposit more = less slippage for traders. The relationship is transparent and deterministic.

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Built-in Fee Revenue

You earn fees on every single trade — both the protocol fee split and the take fees that compound in the reserve. This is passive income from market activity.

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Any Collateral Token

PAMM works with any ERC-20 as collateral. USDC, WETH, DAI — whatever your community prefers.

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For Partners

If you’re building a platform and want to offer prediction markets, PAMM gives you:
  • One contract deployment — PNPFactory handles everything
  • ERC-1155 outcome tokens — standard, composable, tradeable
  • Configurable fees — set protocol and take fee rates
  • Permissionless market creation — let your users create markets
  • Settlement flexibility — any authorized address can settle
  • Full collateral custody — all funds in the contract, transparent on-chain
The creator flow is a single createPredictionMarket() call. Integration is straightforward for any EVM chain.

Economics Deep Dive

Fee structure, settlement math, worked examples with numbers