# BaseCase

<https://www.basecase.gg/>

> *The Prediction Market that bootstraps itself.*

## The Future of Prediction Markets

BaseCase is a revolutionary prediction market protocol that enables **anyone** to create and trade markets without upfront liquidity. Using our novel **Shadow Liquidity** mechanism, markets bootstrap themselves through user participation.

***

## How It Works

<table data-view="cards"><thead><tr><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td><strong>🌱 Create</strong></td><td>Launch markets instantly with zero capital. Shadow Liquidity provides virtual reserves for immediate trading.</td><td><a href="core-concepts/shadow-liquidity">shadow-liquidity</a></td></tr><tr><td><strong>📈 Trade</strong></td><td>Buy or sell outcome shares using a CPMM bonding curve. Prices adjust dynamically with demand.</td><td><a href="core-concepts/bonding-curve">bonding-curve</a></td></tr><tr><td><strong>🎓 Graduate</strong></td><td>At 100% solvency, markets upgrade to Order Book trading with real ERC-20 outcome tokens.</td><td><a href="core-concepts/graduation">graduation</a></td></tr></tbody></table>

***

## Protocol Architecture

{% @mermaid/diagram content="flowchart TB
subgraph Phase1\["PHASE 1: BONDING"]
SL\["Shadow Liquidity<br/>─────────────<br/>• Virtual CPMM<br/>• Soulbound Tokens<br/>• 0% Trade Fee<br/>• USDC Vault"]
end

```
subgraph Phase2["PHASE 2: TRADING"]
    OB["Order Book<br/>─────────────<br/>• ERC-20 YES/NO<br/>• Real Tokens<br/>• 0.1% Taker Fee<br/>• Limit Orders"]
end

subgraph Resolution["RESOLUTION LAYER"]
    UMA["UMA Oracle • Dispute Period • Final Payout"]
end

Phase1 --> Phase2
Phase2 --> Resolution

style Phase1 fill:#f0fdf4,stroke:#22c55e,stroke-width:2px,color:#000000
style Phase2 fill:#eff6ff,stroke:#3b82f6,stroke-width:2px,color:#000000
style Resolution fill:#fefce8,stroke:#eab308,stroke-width:2px,color:#000000
style SL fill:transparent,color:#000000,stroke:none
style OB fill:transparent,color:#000000,stroke:none
style UMA fill:transparent,color:#000000,stroke:none" %}
```

***

## Key Metrics

| Metric                   | Value                             | Description                         |
| ------------------------ | --------------------------------- | ----------------------------------- |
| **Virtual Reserve**      | 1,000 USDC                        | Initial shadow liquidity per market |
| **Bonding Fee**          | **0%**                            | No trading fees during bonding      |
| **Graduation Fee**       | 2%                                | Fee on vault at graduation          |
| **Graduation Threshold** | 100% Solvency + 20% min each side | Required for upgrade                |
| **Trading Fee**          | \~0.2%                            | Taker fee on order book trades      |
| **Creator Revenue**      | 25% of fees                       | Incentive for market creators       |

***

## Core Innovation

{% tabs %}
{% tab title="Shadow Liquidity" %}
Markets start with **virtual reserves** instead of locked capital. The protocol simulates a Constant Product Market Maker using:

$$
virtualYES \times virtualNO = k
$$

Users trade against this virtual pool, with all USDC deposits going into a central vault. Solvency is guaranteed when:

$$
\frac{VaultBalance}{MAX(ShadowYES, ShadowNO)} \geq 100%
$$
{% endtab %}

{% tab title="Creator Incentives" %}
Market creators earn **25% of protocol fees**:

| Fee Type   | Total  | Creator | Stakers | Protocol |
| ---------- | ------ | ------- | ------- | -------- |
| Graduation | 2%     | 0.5%    | 0.5%    | 1%       |
| Order Book | \~0.2% | \~0.05% | \~0.05% | \~0.1%   |

> **Note:** Bonding phase has **0% trading fees**. Fees are only collected at graduation.

This creates strong incentives to create and promote successful markets.
{% endtab %}

{% tab title="Solvency Model" %}
The protocol can **always pay winners** because:

1. CPMM mechanics naturally accumulate fees
2. Virtual reserves are calibrated to cap max liability
3. Graduation only occurs when vault ≥ max payout
4. Resolution is oracle-verified and immutable
   {% endtab %}
   {% endtabs %}

***

## Quick Links

<table data-card-size="large" data-view="cards"><thead><tr><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td><strong>📖 Getting Started</strong></td><td>Understand the protocol fundamentals and start trading</td><td><a href="getting-started/overview">overview</a></td></tr><tr><td><strong>🔧 Technical Docs</strong></td><td>Smart contract interfaces and system architecture</td><td><a href="technical-reference/architecture">architecture</a></td></tr><tr><td><strong>❓ FAQ</strong></td><td>Common questions answered</td><td><a href="reference/faq">faq</a></td></tr><tr><td><strong>📋 Protocol Flow</strong></td><td>Complete lifecycle from creation to resolution</td><td><a href="core-concepts/protocol-flow">protocol-flow</a></td></tr></tbody></table>

***

## Build With Us

| Resource       | Link                                                                   |
| -------------- | ---------------------------------------------------------------------- |
| **GitHub**     | [github.com/BaseCases/BaseCase](https://github.com/BaseCases/BaseCase) |
| **Network**    | Base (Coinbase L2)                                                     |
| **Collateral** | USDC                                                                   |
| **Oracle**     | UMA Optimistic Oracle                                                  |

{% hint style="success" %}
**Ready to dive in?** Start with the [Protocol Overview](https://docs.basecase.gg/getting-started/overview) to understand how BaseCase works.
{% endhint %}