Liquidity Rebalancing
How PMX resists arbitrage and maintains stable prices
How It Works
PMX applies automatic liquidity rebalancing to limit exploitable price gaps and preserve market liquidity. It operates continuously with every trade — no manual intervention, no active market makers needed.
A trade shifts liquidity between the YES and NO pools
Prices recalculate instantly based on new liquidity ratios
Continuous price curves prevent exploitable gaps between trades
Market depth is preserved for genuine price discovery
Why This Matters
Without rebalancing, large trades or coordinated activity could create risk-free arbitrage opportunities that drain liquidity from the market. PMX's smooth price curves eliminate these gaps, ensuring:
- Fair pricing — Prices reflect genuine belief, not arbitrage activity
- Stable markets — No dramatic price jumps between trades
- Protected liquidity — Market depth preserved for real traders
- Manipulation resistance — Coordinated attacks become economically irrational
For Traders
Rebalancing is fully automatic — you don't need to think about it. But understanding it helps with execution:
- Smaller trades have minimal price impact (close to current market price)
- Larger trades move the market more, but are protected from extreme slippage
- Use the quote preview to see your exact fill price before trading
PMX vs. Traditional Markets
| Feature | PMX | Traditional |
|---|---|---|
| Rebalancing | Automatic, every trade | Manual or none |
| Arbitrage Protection | Built-in | Limited |
| Price Stability | Continuous curves | Discrete jumps |
| Intervention | None required | Frequent |
Technical Details
- Continuous price curves derived from real-time liquidity ratios
- No discrete rebalancing events — adjustments happen atomically with each trade
- Mathematically guaranteed to prevent risk-free arbitrage
- Fully on-chain with no off-chain components