🅿️Paradox

Paradox Brings Liquid Betting Markets to the Blockchain. This gitbook contains all information associated with Paradox that is not on the website or smart contracts.

Paradox is a parimutuel betting protocol built on Arbitrum designed to scale betting liquidity on the blockchain. To date, on-chain betting has yet to gain any traction because protocols have yet to adequately incentivize liquidity providers (LPs).

We believe LPs must be able to profitably and passively provide liquidity in prediction markets. We propose a parimutuel pricing model which (1) lowers entry costs to provide liquidity and (2) protects liquidity providers from the adverse selection bias which runs rampant in prediction markets.

The betting platforms of tomorrow will not compete against their users but simply connect them. Paradox is the future of betting.

The odds received for betting into a parimutuel protocol depend exclusively on the ratio of money bet into each pool at the start of the event. It does not matter when a user makes a bet; all users who bet on team A will get the same odds. The arbitrage opportunity presented by any mispricing in the pool relative to traditional betting venues is expected to incentivize the normalization of the pool odds to the current market odds, up until the pool locks.

Paradox revolutionizes parimutuel betting by distributing all of the 1% commission fee to earlier bettors. Paradox protocol extracts no rent. The commission is proportionally distributed after each bet based on the amount you bet. If you have bet 500 units and the total pool has a total of 1500 units in bets after your bet, you would receive 33.33% of the commission paid on the subsequent bet.

When you make a bet, you are depositing stablecoins to mint Team Tokens. 1 Team Token represents a 1 unit bet. If you bet 101 units you will receive 100 Team Tokens, and 1 unit will go to the commission pool.

After the pool settles, to collect your winnings you can redeem the winning Team Token back for stablecoins. For example, if 100 units were bet on Team A and 200 units were bet on Team B, one Team A Token could be redeemed from the protocol for 3 units (if Team A won), and one Team B Token could be redeemed for 1.5 units (if Team B won). Losing Team Tokens are worth 0 units.

Paradox will continue to evolve and become more and more decentralized. Our current version relies on admins from around the world to enter scores and create games. Final scores are sent to the contract when 3 of 6 signers on a Gnosis multisig input the same bet result. See Multisig.

Our goal for the first version of the contract is to determine the merit of this new type of betting. We prioritized usability first and foremost and believe we have developed a protocol that will usher in a new era of betting.