Skip to main contentMarket Mechanics
Baru uses a dynamic parimutuel model to ensure liquidity is pooled efficiently. Below is a breakdown of how orders are processed and how odds are determined in real-time.
Order Flow
Orders are treated as signed prices to differentiate between outcomes:
- Positive Values: Add liquidity to the YES pool.
- Negative Values: Add liquidity to the NO pool.
The system maintains a running state with separate liquidity for each side alongside an overall volume total.
Odds Calculation
The market moves through two distinct states based on available liquidity:
- Fixed State: The odds remain pinned at 50/50 until both pools have received liquidity.
- Dynamic State: Once both the YES and NO sides have volume, the probability floats based on the ratio of the pools:
P(Yes)=VolumeTotalLiquidityYes
Profit Sharing (Gamma)
To ensure fair distribution of profits upon resolution, every order is assigned a Gamma Coefficient at the moment it is placed. This coefficient is stored and used later to apportion the payout.
The Gamma is calculated as:
γ=Volumecurrent+Oddscurrent1
Settlement Rules
To prevent manipulation or invalid market states, the engine enforces strict liquidity requirements before closing a market.
Minimum Liquidity RequirementsTo successfully settle, a market must have:
- Total Volume: At least $5.00
- Per-Side Volume: At least $1.00 in both the YES and NO pools.
If these conditions are not met, the market raises an insufficient-liquidity error and funds are refunded rather than settled. 
