Wager Protocol

Decentralized Binary Prediction Market on Solana

Overview

Wager Protocol is a high-speed, decentralized prediction market built on Solana using the Anchor framework. It allows users to speculate on binary (Yes/No) outcomes using a unique Automated Market Maker (AMM) model.

Unlike traditional order-book markets, Wager Protocol utilizes a Constant Product (CP-AMM) invariant (x * y = k) to facilitate instant liquidity, enabling users to enter and exit positions at any time before market resolution without needing a counterparty.

Key Features

• Dynamic AMM Pricing: Prices adjust automatically based on the ratio of funds in the YES/NO pools, reflecting real-time market sentiment.
• Instant Liquidity: Exit positions early via the AMM curve (sell back to the pool) or wait for resolution to claim full winnings.
• Slippage Protection: Built-in slippage limits ensure users are not filled at unfavorable rates during high volatility.
• Fee Structure: Configurable protocol fees and developer fees, distributed automatically upon withdrawals and claims.
• Secure Architecture: Fully on-chain logic with strictly typed accounts and permissioned resolution.

AMM Mechanics

The protocol manages liquidity using the formula:

$$ k = P_{outcome} \times P_{other} $$

When a user withdraws (sells) amount $X$:

1. Update Pool: $P_{outcome}' = P_{outcome} - X$
2. Maintain Constant: $P_{other}' = k / P_{outcome}'$
3. Calculate Payout: $\text{Payout} = P_{other} - P_{other}'$

This ensures that as the probability of an outcome increases (pool size grows), the cost to buy/sell adjusts exponentially, preventing arbitrage drainage.

Usage Example

// 1. Create a Market
await program.methods
  .createMarket(
    "Will BTC hit $100k by 2025?",
    ["YES", "NO"],
    new anchor.BN(expiryTimestamp)
  )
  .accounts({...})
  .rpc();

// 2. Place a Bet (Mint Position)
await program.methods
  .placeBet(0, new anchor.BN(1_000_000)) // Bet 1 USDC on YES
  .accounts({...})
  .rpc();

// 3. Early Exit (Sell to AMM)
await program.methods
  .withdrawFromPosition(
    new anchor.BN(500_000), // Withdraw 0.5 shares
    new anchor.BN(450_000)  // Min payout 0.45 USDC (Slippage)
  )
  .accounts({...})
  .rpc();

Development

Prerequisites

• Rust 1.75+
• Solana CLI 1.17+
• Anchor 0.29+

Build & Deploy

# Build program
anchor build

# Run test suite
anchor test

# Deploy to Devnet
anchor deploy --provider.cluster devnet

License

Distributed under the MIT license.