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Virtual Liquidity AMM (PAMM)

PNP’s Prediction AMM (PAMM) is a constant product market maker purpose-built for binary outcome markets on EVM chains. It provides instant, continuous liquidity from a single collateral deposit — no LP tokens, no order books, no bootstrapping problem.

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Why PAMM Exists

Every prediction market needs a way for traders to buy and sell outcome tokens against collateral. Existing approaches all have friction:
ApproachProblem
Order booksThin markets, need active market makers, poor UX
LMSR (Logarithmic)Subsidy provider has unbounded loss, complex math
AMM with real LPsChicken-and-egg: someone must mint both tokens to seed the pool
PAMM takes a different path. The AMM pool is implied from a single number — the reserve. There is no pool in the traditional sense. Liquidity depth emerges from a mathematical relationship between three on-chain values.

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How It Works in 30 Seconds

  1. A creator deposits collateral (e.g. 10,000 USDC) into the contract
  2. This becomes the reserve R — the market’s liquidity backbone
  3. Virtual reserves are derived: V_YES = R - S_YES, V_NO = R - S_NO
  4. Uniswap V2-style constant product math runs on these virtual reserves
  5. Every market starts at 50/50 — price discovery happens through trading
  6. At settlement, winners split the entire reserve pro-rata
No LP tokens are minted. No one needs to provide both sides. One deposit creates a fully functional, continuously tradeable market.

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Key Properties

  • Instant liquidity — market is tradeable the moment it’s created
  • Single-sided seeding — creator deposits collateral, receives zero tokens
  • Self-balancing prices — constant product formula ensures prices always sum to 1.00
  • Depth scales with reserve — bigger deposit = tighter spreads, less slippage
  • Gas efficient — single transaction per trade, no matching engine
  • EVM native — deployed as Solidity contracts with ERC-1155 outcome tokens

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Deployed Networks

PAMM is currently deployed on:
  • Monad (testnet)
  • Base
  • Polygon
The contracts are written in Solidity 0.8.28 using the Foundry framework.

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Core Contracts

ContractRole
PNPFactoryMarket creation, minting/burning outcome tokens, settlement, redemption. Holds all collateral as ERC-1155.
VirtualLiquidityLibPure math library implementing the CPMM bonding curve — buy/sell calculations, quadratic solver.
FeeManagerAccumulates protocol fees. Splits 50/50 between market creator and protocol owner after market ends.

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Who Is PAMM For?

Market creators who want to spin up prediction markets without needing a market maker or LP pool. Deposit collateral, set a question and deadline, and you have a live market. Partners and protocols looking for easily bootstrappable liquidity for custom markets — sports, crypto prices, governance votes, real-world events. PAMM gives you a working AMM with a single function call. Traders who want to express views on binary outcomes with instant execution, transparent pricing, and on-chain settlement.

How It Works

Virtual reserves, CPMM math, buying and selling mechanics

For Creators

How to create markets, what you earn, risk profile

Economics

Fee structure, settlement payouts, worked examples