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image-landscapeIncentives for Traders, Liquidity Providers, and Creators

How Foremarket aligns participation, signal quality, and market creation through explicit economics.

Foremarket is designed around the idea that good prediction markets do not emerge by accident. They emerge when incentives are correctly aligned across three distinct roles: traders, liquidity providers, and market creators. Each role contributes a different form of value, and each is compensated accordingly.

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Incentives for Traders

Traders are the primary source of information. Their incentive is straightforward: profit from being right earlier than others.

For a trader ( u ) in outcome ( i ):

ExpectedValue_u = (P_true_i - P_market_i) * q_i

Where:

  • P_true_i is the trader’s subjective belief

  • P_market_i is the current market-implied probability

  • q_i is the number of shares traded

Positive expected value exists only when traders possess information or insight the market has not yet priced. This naturally rewards domain expertise, research, and speed of interpretation. Because markets are permissionless, traders are free to seek out markets where they have genuine edge, rather than being constrained to a small set of centrally curated questions.

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Incentives for Liquidity Providers

Liquidity providers (LPs) supply depth to markets, reducing slippage and allowing prices to move smoothly as information arrives. In return, they earn a share of trading fees.

LP_Revenue = Σ Trades (TradeSize * FeeRate) * LP_Share

LPs are exposed to information risk. When informed traders trade against the pool, LPs may lose value. This is not a bug. It is the mechanism by which information enters the market. Fees compensate LPs for absorbing this risk.

Because Foremarket supports a large number of markets, LPs can specialize. Some may provide liquidity only to high-volume markets. Others may target niche markets where spreads are wider but information arrives less frequently.

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Incentives for Market Creators

Market creators are Foremarket’s defining role.

Creators are incentivized in three ways:

  1. Creator Fees A portion of trading fees can be routed to the market creator.

    This rewards creators for launching markets that attract volume.

  2. Information Monetization Creators often have superior contextual knowledge. By creating markets early, they can trade alongside others and monetize insight legitimately.

  3. Reputation and Reusability High-quality creators build reputational capital. Their markets attract liquidity faster, resolve cleanly, and are embedded by third-party applications.

The creator bond ensures accountability. Low-quality or malicious markets are economically punished, while high-quality markets compound creator returns over time.

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Why This Incentive Model Scales

In closed systems, all upside accrues to the platform. In Foremarket, upside is distributed to the edges, where information originates.

The platform’s role is to enable this flow, not dominate it.

This is why permissionless market creation is not just a UX feature. It is an economic engine. When creators are rewarded, more markets exist. When more markets exist, more information is priced. When more information is priced, the system becomes more valuable.

Foremarket grows not by choosing the right markets, but by letting the right markets emerge.

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