ARENA in full.

What is ARENA

ARENA is a prediction market protocol on Solana. Trade YES/NO on KOL outcomes, memecoin metrics, and other on-chain events. Pricing is set by an LMSR market maker with dynamic b liquidity that scales with market seed. The protocol is governed by crons, not committees.

What makes ARENA different from other prediction venues isn’t the order matching — it’s the economics. Two closed-loop flywheels feed each other: $ARENA pump.fun volume funds market liquidity; prediction trade fees fund $ARENA buy-and-burn. Nobody tops up reserves. Nobody collects house rake to a personal wallet.

How it works

Pick a market, take a side. YES at $0.40 means the market thinks there’s a 40% chance the event resolves YES. Buy shares, the price rises. Sell shares, it falls. You can trade in and out at any time before the deadline.

At the deadline, the market locks. The auto-resolver pulls the outcome from its data source — Dune query, kolscan snapshot, or Pyth oracle reading. Winning shares pay 1 SOL each. Losing shares pay 0. If you bought YES at $0.40 and YES wins, each share returns 1 SOL — a 2.5× gain.

LMSR PRICING

Cost function:    C(q) = b × ln(e^(qYes/b) + e^(qNo/b))
YES price:        e^(qYes/b) / (e^(qYes/b) + e^(qNo/b))
Cost to buy d:    C(qYes + d, qNo) - C(qYes, qNo)
Where:
  qYes, qNo  = outstanding shares of each side
  b          = liquidity parameter (per-market, dynamic)

The b parameter controls curve smoothness. Higher b = flatter pricing, less impact per trade. Lower b = jagged curve, larger price moves. ARENA sets b = total_seed / ln(2) so escrow always covers worst-case LMSR house liability. Winners never get haircut.

The two flywheels

ARENA runs on two closed loops. They’re coupled but not circular: Loop A gives traders something to trade on; Loop B makes $ARENA scarcer (which feeds back into Loop A by encouraging more $ARENA volume on pump.fun).

LOOP A — $ARENA volume → market liquidity

pump.fun trades on $ARENA
  → creator fees accrue (bonding curve + PumpSwap)
  → cron-claim-creator (every 30 min) sweeps both vaults → SEED WALLET
  → cron-seed (every 5 min) distributes seed → market escrows
  → markets graduate pending_seed → live, deepen as funding compounds

Two crons drive Loop A. cron-claim-creator calls distribute_creator_fees to pull SOL from both creator vaults into the seed wallet — but only if adminRevoked is true, so the admin can’t re-route fees mid-claim. cron-seed runs a bootstrap pass first (fund pending_seed markets to the 0.5 SOL minimum, oldest first) and then a growth pass (deepen live markets toward tier targets).

LOOP B — prediction trades → $ARENA burn

user buys/sells YES or NO shares
  → 5% fee taken (4% protocol + 1% LP, or 3.5% + 0.5% creator + 1% LP)
  → seeders credited LP fee pro-rata, time-weighted
  → cron-sweep (every 15 min) moves protocol skim → TREASURY WALLET
  → cron-crank (every 30 min) fires when treasury > 0.5 SOL
  → swap SOL → $ARENA via Jupiter Ultra
  → 50% burned, 50% sent to LP destination
  → $ARENA supply drops, depth grows

cron-sweep walks every market escrow and transfers any accrued pendingSkim to the treasury wallet (rent-exempt, on-chain). cron-crank waits for the treasury balance to clear 0.5 SOL, then runs a single composite transaction: Jupiter Ultra swap → SPL burn (50%) → SPL transfer to LP destination (50%). Slippage tolerance is 1%.

WHY THIS SHAPE

ARENA needs no operator capital, no investor cap-table, no admin multisig. $ARENA’s own creator fees seed the markets. Prediction trades fund the buy/burn. The two flywheels pay for each other. The crons are dormant until $ARENA launches; once it does, the system is fully autonomous.

For traders

BETTING

POST /api/trade
{
  "marketId": "...",
  "wallet":   "<your-pubkey>",
  "side":     "YES" | "NO",
  "action":   "buy",
  "amount":   1.0,           // SOL
  "txSignature": "<sig>"     // SystemProgram.transfer to market escrow
}

You sign one transaction (transfer SOL to the per-market escrow), then POST the signature. The backend verifies the deposit on-chain, calculates shares via LMSR, and credits your balance.

SELLING

POST /api/trade
{
  "marketId": "...",
  "wallet":   "<your-pubkey>",
  "side":     "YES",
  "action":   "sell",
  "amount":   23.6           // shares
}

Selling is server-mediated — no wallet interaction needed. The escrow signs the SOL payout to your wallet. Shares are deducted atomically.

FEE BREAKDOWN — 5% TOTAL

PAYOUTS

Markets resolve automatically once their deadline passes. The auto-resolver fetches the metric value, compares it against the threshold, sets the outcome, and pays winners in batches from the market escrow. With dynamic-b solvency, every winning share pays exactly 1 SOL — no haircuts.

For seeders

Seeders provide liquidity to prediction markets in exchange for a cut of all trading fees on that market. Anyone can seed any market in pending_seed or live state.

HOW LP FEES WORK

On every trade:
  trade_lp_fee = trade_sol × 0.01    // 1% LP cut

  for each seeder w in this market:
    seeder_share         = seed_wallet[w] / seed_total
    accrued_lp_fees[w]  += trade_lp_fee × seeder_share

Distribution is pro-rata by share, time-weighted (your share at the moment of each trade is what matters). LP fees aren’t paid mid-market — they accumulate per-seeder and pay out lump-sum at resolution alongside your principal share.

DEPOSIT FLOW

POST /api/seed
{
  "marketId":     "...",
  "wallet":       "<your-pubkey>",
  "amount":       1.5,
  "txSignature":  "<sig>"   // SOL transfer to market escrow
}

Validation: market must be in pending_seed or live; the lock cutoff (final 10% of the market’s lifetime) must not have passed; tx signature must verify a SOL transfer to the market escrow. Once validated, your deposit increments seed:{id}:total and recomputes b = seed / ln(2).

THE MATH

With N SOL of total seed, the curve supports b = N / 0.693 of liquidity. Higher b = smoother prices, larger trades possible without massive impact. A 0.5 SOL market has b ≈ 0.72 (jagged); a 7 SOL market has b ≈ 10 (very smooth).

RISK

In lopsided markets, the LMSR house pays out more than the escrow holds, so seeder principal can be partially consumed. This is the quid pro quo for LP fee yield: you take the house side of the trade, you eat the house’s losses.

Concretely, at resolution the order is: (1) winning share holders paid in full; (2) creator fees paid (if user-created); (3) what remains in escrow is divided pro-rata among seeders, plus their accrued LP fees. If the market resolved cleanly down the middle, seeders typically get their principal back plus LP fees. If it resolved heavily lopsided and absorbed most of the seed, the principal share is smaller but LP fees still pay out.

RULES

For market creators

User-created markets earn the creator 0.5% of all trade volume on that market, paid at resolution. The creator address is set when the market is created and credited via creator:{wallet}:earnings on every trade.

Today most markets are auto-generated by ARENA from kolscan leaderboards and Dune queries — those are anonymous, so the creator slot collapses (no creator cut, the full 4% protocol skim applies). User-created markets are coming; the math is already wired through every trade.

FEE FLOW (USER-CREATED)

Trade fee:        5.0%
  Protocol:       3.5%   →  treasury → buy/burn $ARENA
  Creator:        0.5%   →  market creator (paid at resolution)
  LP:             1.0%   →  seeders pro-rata

Tokenomics ($ARENA)

$ARENA is not yet launched. The two flywheels are wired but dormant — both cron-claim-creator and cron-crank exit cleanly when ARENA_MINT is unset. The flag flips at token launch.

SUPPLY MECHANICS

FEEDBACK LOOPS

Deflation: every prediction trade burns supply. More volume on ARENA → more SOL in treasury → more $ARENA bought and burned. The supply curve only moves down.

LP accumulation: the other 50% deepens the PumpSwap pool. Bigger trades fill with less slippage, attracting more $ARENA volume on pump.fun, which generates more creator fees, which feeds back into Loop A.

Creator-fee feedback: $ARENA collects pump.fun creator fees. Those don’t go to a person — they go to the seed wallet, where they bootstrap the next batch of prediction markets. The token literally pays for its own product.

Verifiability

Every action on ARENA is on-chain and auditable. There is no hidden ledger, no off-chain settlement, no “trust us” on the money. The two pool wallets and every per-market escrow are public; every transfer signature is on solscan; the source of truth for balances is RPC, not Redis.

POOL WALLETS

PER-MARKET ESCROWS

Each market has its own escrow keypair, deterministically derived and AES-256-GCM encrypted in Redis. The pubkey is shown on every market page and links to solscan. Every share purchase, every sell, every sweep, every payout is a real on-chain transfer.

WALLET PROFILES

Every trader and seeder address is a clickable shortcode that opens /u/{wallet} — full position history, P&L, accrued LP fees, and a solscan link. Receipts, not screenshots.

Risks

FAQ