Bonding Curve

Orica uses a Linear Bonding Curve to price outcome shares. This mechanism ensures continuous liquidity and enables price discovery based on market demand.

The Formula

The price of a share for a specific outcome is determined by the current supply of that outcome’s shares.

P = P_{base} + (S \times P_{slope})

Variable	Value	Description
$P$	Calculated	Price in microlamports (USDC base units)
$P_{base}$	1,000	Base price (0.001 USDC)
$S$	Variable	Current supply of shares for this outcome
$P_{slope}$	10	Price increase per share (0.00001 USDC)

Price Impact

Buying
Selling

When you buy shares, the supply increases, and the price rises.Example: If current supply is 100 shares:

Current price: $0.001 + (100 \times 0.00001) = $0.002 per share$
After buying 50 shares, new supply is 150
New price: $0.001 + (150 \times 0.00001) = $0.0025 per share$

The total cost is the integral of the price function from the old supply to the new supply.

Market Cap

The Market Cap of an outcome is the total value of all shares, calculated as:

MC = S \times (P_{base} + P_{slope} \times S)

This represents the total USDC that would be required to buy all existing shares at the current curve.

Calculating Prices in Code

The SDK provides a helper method:

const market = await sdk.orica.fetchMarket(marketAddress);
const prices = sdk.orica.calculateMarketPrices(market);

// prices[0] = price of outcome 0
// prices[1] = price of outcome 1
// etc.

console.log(`Yes: $${prices[0].toFixed(4)}`);
console.log(`No: $${prices[1].toFixed(4)}`);

Manual Calculation

const CURVE_BASE_PRICE = 1_000; // 0.001 USDC in microlamports
const CURVE_SLOPE = 10;         // 0.00001 USDC per share
const USDC_SCALE = 1_000_000;   // 6 decimals

function calculatePrice(supply: number): number {
  const priceInMicrolamports = CURVE_BASE_PRICE + (CURVE_SLOPE * supply);
  return priceInMicrolamports / USDC_SCALE;
}

Slippage

Large trades can experience slippage because the price changes as shares are bought or sold.

Buying: You pay more per share on average than the starting price
Selling: You receive less per share on average than the starting price

The larger your trade relative to the existing supply, the more slippage you will experience. Consider breaking large orders into smaller chunks.

Price vs. Probability

In prediction markets, the price of an outcome can be interpreted as the market’s implied probability of that outcome occurring.

If “Yes” shares cost $0.65, the market implies a 65% probability of “Yes”
If “No” shares cost $0.35, the market implies a 35% probability of “No”

This interpretation assumes a two-outcome market where prices sum to approximately $1.00. Multi-outcome markets have more complex probability distributions.

Getting Started

Core Concepts

Resolution

Technical Architecture

Bonding Curve

The Formula

Price Impact

Market Cap

Calculating Prices in Code

Slippage

Price vs. Probability

Next Steps

Trading

Disputes

​The Formula

​Price Impact

​Market Cap

​Calculating Prices in Code

​Slippage

​Price vs. Probability

​Next Steps

Trading

Disputes

The Formula

Price Impact

Market Cap

Calculating Prices in Code

Slippage

Price vs. Probability

Next Steps