# Overview

## ⚙️ Protocol Overview

Prism Market is a decentralized prediction market protocol that runs on the Hedera network. It allows trading on binary outcomes using a Central Limit Order Book (CLOB) structure. This setup provides a fast and clear way to forecast future events. 

Prism aims to be the "Truth Layer" of the Hedera ecosystem. It combines global sentiment into precise, real-time probabilities.

### Core Architecture: The Hybrid Model

Prism combines the speed of Web2 matching with the security and transparency of Web3 settlement. 

* Off-Chain Matching: Orders are matched almost instantly by a high-performance off-chain engine. This removes the delays and gas fees linked to on-chain order books, ensuring a smooth trading experience similar to centralized exchanges. 
* On-Chain Settlement: While matching takes place off-chain, all trade execution and redemption are completed using the Hedera Smart Contract Service (HSCS). This keeps the protocol non-custodial and ensures that settlement cannot be changed. 
* Auditable History: Market creation and important events are logged through the Hedera Consensus Service (HCS), creating a verifiable, tamper-proof record of all market activity.

### Market Mechanics

#### Binary Outcomes & Collateral

Each market on Prism is binary, consisting of YES and NO shares backed by USDC collateral.

* Share Value: Prices float between $0.00 and $1.00, representing the market's estimated probability of the event occurring (e.g., a share price of 0.65 implies a 65% probability).
* Settlement: Upon resolution, winning shares are redeemable for 1.00 USDC, while losing shares become worth 0 USDC.

### CLOB vs. AMM

Unlike Automated Market Makers (AMMs) that use bonding curves, Prism uses a Central Limit Order Book (CLOB). Prices are discovered through direct competition between buyers and sellers. This model is preferred for prediction markets as it allows for tighter spreads and more accurate probability discovery without the "impermanent loss" often found in AMMs.

### Fee Structure

Prism utilizes a unique revenue model designed to encourage maximum trading activity.

* 0% Interface Fees: There are no fees applied to buying or selling position tokens. Users can enter and exit positions freely without friction.
* Protocol Redemption Fee: Protocol revenue is captured exclusively when a market concludes. At resolution, a 2% fee is applied to the Total Value Locked (TVL) within that specific market. The remaining collateral pool is then made available for users to redeem their winning position tokens.
* Alignment: This model ties protocol revenue to successful market resolution rather than extracting value from order flow, keeping the trading experience fee-neutral until the event concludes.

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Note: The 0% interface fee is designed to support early protocol growth. This rate is subject to future adjustment by Prism Market Labs.
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### Permissionless Creation & Resolution

* Creation: Market creation is permissionless, allowing any user to propose markets on the protocol.
* Resolution: To ensure integrity, outcomes are resolved using multiple oracle providers, guaranteeing that the data used to settle markets is accurate and resistant to manipulation.