Prediction Battle

1.1 Zero-stake social predictions: Social platforms are saturated with unverifiable predictions — crypto debates, influencer rivalries, political forecasts — but participants bear no financial consequence for being wrong. This results in low-quality discourse and no mechanism for price discovery around social outcomes.

1.2 Centralized custody risk: Existing prediction markets (Polymarket, Kalshi, Manifold) rely on centralized operators for fund custody, market creation, and resolution. This introduces counterparty risk, geographic censorship, and settlement opacity.

1.3 Oracle centralization: Most on-chain prediction protocols depend on external oracle providers (Chainlink, UMA, Pyth) that are expensive, slow to integrate, and unsuitable for qualitative or social media-based outcome data. Outcome verification for subjective social events remains an open problem.

1.4 High entry barrier: Complex token bridges, multi-step approvals, and illiquid prediction tokens discourage casual participation. A stablecoin-native (USDC) protocol on a cheap, fast L2 radically lowers this barrier.

Prediction Battle addresses these problems through four architectural decisions:

3.1 Market Creation

Any wallet may create a market by depositing a minimum seed of 1 USDC and submitting a question (10–500 characters). The seed is held separately from the betting pools and is fully refundable to the creator after resolution. There is a 1-hour anti-spam cooldown per creator address.

3.2 Market Types

• Time-Bound: Has an explicit deadline. Bets are accepted until the deadline passes, after which only outcome proposals are accepted.
• Open-Ended (deadline = 0): No fixed expiry. Bets accepted until a proposer initiates resolution. The creator must wait 24h before self-proposing.

3.3 Betting

• Participants choose Side A or Side B. Their USDC enters the liquidity pool for their chosen side.
• Minimum bet: 0.05 USDC · Maximum: 100,000 USDC
• Total market pool cap: 1,000,000 USDC
• Multiple bets on the same side accumulate. The referrer address is locked on the first bet per user per market and cannot be overwritten.

3.4 Early Bird Bonus

Bets placed during the creator-defined bonus window receive 1.2× shares instead of the base 1.0×. Shares determine the proportional claim on the winning pool. This rewards participants who take on greater uncertainty by committing capital early.

3.5 Market States

Prediction Battle uses a Pari-Mutuel pool model. All bets on each side form two isolated pools. If your side wins, your proportional share of the opposite pool is distributed to you (after fees).

4.1 Share Calculation

4.2 Multiplier Dynamics

The effective multiplier is determined by the ratio of the opposing pool to your own pool at market close. A heavily unbalanced market (e.g., $200 on Side A vs $2,000 on Side B) produces a high multiplier (~10×) for Side A bettors and a low multiplier (~1.1×) for Side B bettors. This dynamic price discovery incentivizes contrarian capital to balance pools, improving market efficiency.

4.3 Special Outcomes

• DRAW: All bettors receive 100% of their stake back. No fees collected.
• CANCELLED: Admin voiding. Full stake refund to all participants.
• One-sided pool: If the losing side has $0, winners reclaim their original stake only (no profit to distribute).

All fees are calculated and deducted exclusively from the profit margin (the losing pool distribution). The original stake of every bettor is never subject to fees.

Fees are pre-computed at market resolution (not at claim time), stored as separate balances, and withdrawable by each recipient independently. This design prevents any single actor from blocking fee collection.

Resolution is modeled as an Optimistic Oracle: assume honesty, penalize dishonesty economically.

The 30-day Emergency Timeout ensures that no market can be permanently stuck. After 30 days without resolution, an admin may void the market and refund all participants.

• Non-Custodial: All funds are transferred directly to the smart contract via ERC-20 safeTransferFrom. No EOA or backend wallet holds user funds.
• ReentrancyGuard: All state-changing functions implement Checks-Effects-Interactions (CEI) and use OpenZeppelin's ReentrancyGuard.
• AccessControl (Role-based): Admin functions are protected by DEFAULT_ADMIN_ROLE. Operator functions by OPERATOR_ROLE. Role transfers require explicit setOperator() — direct grantRole on OPERATOR_ROLE is blocked.
• Treasury Timelock: Changes to the treasury address require a 2-day timelock via a two-step propose/execute pattern, preventing immediate rug vectors.
• Global Liability Tracking: All USDC locked (bets + bonds + seeds) is tracked in totalLockedAmount, enabling trustless solvency audits at any time.
• Circuit Breakers: Configurable max bet (100k USDC) and max pool (1M USDC) caps prevent extreme concentration of funds in a single market.
• MEV Protection: Open-ended markets have a per-user 5-minute cooldown between placing a bet and proposing an outcome on the same market, preventing same-block manipulation.
• Pausable: Admin can halt all market activity in an emergency without disrupting existing claims.
• Verified on Basescan: Contract source is publicly verified on Base Mainnet.

The slashing system is not a discretionary penalty. It is a hardcoded economic deterrent written into the contract's resolution logic. Slashing is irreversible once executed on-chain.

8.1 Bond Slashing (Dishonest Reporters)

When a dispute is resolved and a liar is identified:

• The liar forfeits 100% of their submitted bond.
• 80% of the forfeited bond is awarded to the honest counterparty as a bounty.
• 20% is transferred directly to the protocol treasury.
• The honest winner also inherits the 1% Reporter Reward from the market's profit pool.

8.2 Seed Confiscation (Fraudulent Market Creators)

If an admin determines a market was created fraudulently (fabricated subject, manipulated evidence, collusion):

• The creator's seed deposit is permanently confiscated and transferred to the treasury.
• The market resolves as CANCELLED — all bettors receive 100% stake refunds.
• This is logged via the SeedConfiscated event (distinct from voluntary WithdrawSeed).

8.3 Incentive Alignment Summary

The economic game theory model ensures that at every decision point, the cost of lying exceeds the potential gain from lying. As pool sizes grow, bond requirements scale proportionally, making large-scale manipulation progressively more expensive.