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Market Fee (Dynamic Risk Fee)

The market fee is a dynamic fee that scales with how much risk your bet adds to the vault.

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How It’s Calculated

Market Fee Rate = (Vault Exposure After Bet - Vault Exposure Before Bet) / Total Vault Assets
Capped at 3% maximum.

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The Logic

When you bet on a side that already has heavy action:
  • Your bet increases the vault’s potential loss if that side wins
  • The fee compensates for this added risk
  • Fee rate increases as exposure approaches the 3% cap
When you bet on the underbet side:
  • Your bet reduces the vault’s net exposure
  • Instead of a fee, you may receive a rebate
  • Rebates incentivize market balancing

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Example: Adding to Imbalance

Setup:
  • Vault: $100,000
  • Current exposure: $1,000 on Team A (1%)
  • You bet $500 on Team A at -110 odds
Calculation:
  • Your bet adds ~$454 to Team A exposure
  • New exposure: $1,454 (1.45%)
  • Average fee rate: (1% + 1.45%) / 2 = 1.23%
  • Market fee: 500×1.23500 × 1.23% = 6.15

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Example: Reducing Imbalance (Rebate)

Setup:
  • Vault: $100,000
  • Current exposure: $2,000 on Team A (2%)
  • You bet $500 on Team B at +110 odds
Calculation:
  • Your to-win amount: $550
  • This offsets $550 of Team A’s exposure
  • New imbalance: $1,450 (1.45%)
  • Rebate rate: (2% + 1.45%) / 2 = 1.73%
  • Rebate earned: 500×1.73500 × 1.73% = 8.63
Your net cost = 0.3% system fee - 8.63rebate=∗∗−8.63 rebate = **-7.13** (you profit!)

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Rebate Deep Dive

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When Do You Get a Rebate?

You earn a rebate whenever your bet reduces the vault’s net exposure:
Current Heavy SideYour BetResult
Team ATeam B✅ Rebate
Team BTeam A✅ Rebate
BalancedEitherNo rebate (but low fee)

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Rebate Formula

Rebate = Bet Amount × Average Reduction Rate
Where: 
Average Reduction Rate = (Rate Before + Rate After) / 2
Rate = Imbalance / Vault Assets

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Partial Derisking

If your bet is larger than the current imbalance:
  1. First portion earns a rebate (derisking segment)
  2. Remaining portion pays a fee (creating new imbalance on opposite side)
Example:
  • Imbalance: $1,000 on Team A
  • You bet $2,000 on Team B
  • First $1,000 of to-win: earns rebate (eliminates imbalance)
  • Remaining to-win: pays fee (creates Team B exposure)

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Maximum Rebate

Rebates are capped at 3% (same as fees), so the maximum rebate is: 
Max Rebate = Bet Amount × 3%

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Fee Recycling

Market fees collected are made available to users who take the opposing side, further incentivizing balanced markets. This creates a virtuous cycle:
  1. Fees from imbalance-adding bets → Pool
  2. Pool funds rebates for imbalance-reducing bets
  3. Result: Naturally balanced markets with minimal vault risk