Allow creators and users to provide liquidity to markets

Issue #72 | State: OPEN | Created: 2026-01-23T04:15:37Z

Updated: 2026-01-23T04:25:45Z | Closed: N/A

Summary

Enable market creators to contribute their own liquidity at market creation, and allow regular users to provide liquidity to existing markets as LPs (Liquidity Providers).

Background

Currently, the platform provides 100% of market liquidity. The creator's deposit is separate (penalty-only, Option B — see docs/task/design/penalty-liquidity-config-ui.md). This feature would let participants earn LP revenue by contributing their own funds to the liquidity pool.

Two Capabilities

1. Creator Initial Liquidity (at market creation)

The creator configures how much of the total liquidity they personally provide vs. platform support.

• UI wireframe already exists: docs/images/liquidity-config-wireframe.png
• Fields: Total Liquidity (read-only), User Liquidity (adjustable), Platform Support (auto-calculated)
• Minimum: 50 USDC (matches penalty deposit)
• Formula: Total Liquidity = 2 × Initial Liquidity × Number of Outcomes

2. User Liquidity Provision (post-creation)

Any user can add liquidity to an active market and earn proportional LP revenue.

• User deposits USDC → receives LP share tokens
• Earns proportional sales proceeds from token trades
• Can withdraw liquidity (subject to market rules)
• Settlement splits payouts by LP share ratio

Requirements

• Dual/Multi-LP settlement logic (proportional splits)
• MarketTokenOwnership table for tracking LP shares
• MarketEscrow table for sales proceeds attribution
• "Last one gets remainder" precision pattern for settlement
• LP share calculation for mid-market entries
• Withdrawal rules (lock period? partial withdrawal?)
• Settlement fee exemption for LP redemptions
• Fuzz testing for settlement security (rounding, overdraft)

Prerequisites

• Penalty deposit system (Option B) shipped and stable
• Validated creator demand for LP participation
• Settlement security audit completed

Reference

• Design doc: docs/task/design/penalty-liquidity-config-ui.md (see "Future Feature" section)
• UI wireframe: docs/images/liquidity-config-wireframe.png

Comments

@linked0 — 2026-01-23T04:25:45Z

It's an reference UI.