FAQ
Frequently asked questions about the BaseCase Protocol
General
What is BaseCase?
BaseCase is a decentralized prediction market protocol built on Base (Coinbase's L2). It enables anyone to create and trade prediction markets without requiring upfront liquidity.
The protocol uses a novel "Shadow Liquidity" mechanism that bootstraps markets through virtual reserves, graduating to full order book trading once solvency is achieved.
Why is it called "BaseCase"?
The name plays on two meanings:
Base Network: We're built on Base, Coinbase's Layer 2
Base Case: In logic, the fundamental assumption from which predictions flow
It's also a nod to prediction markets being about establishing the "base case" probability for future events.
Is BaseCase custodial?
No. BaseCase is fully non-custodial:
Your funds remain in smart contracts
Only you control your wallet
Winnings are claimable permissionlessly
No KYC required
Trading
How do I make money?
You profit when your prediction is correct:
100 YES
$0.60
YES wins
$100
+$40
100 YES
$0.60
NO wins
$0
-$60
Winners receive $1 per share. Losers receive $0.
Alternatively, you can sell your shares before resolution if the market moves in your favor.
What are the fees?
Bonding (Buy/Sell)
2.0%
50% Creator / 50% Protocol
Graduation
2.0%
50% Creator / 50% Protocol
Order Book (Taker)
0.1%
50% Creator / 50% Protocol
Order Book (Maker)
0%
—
Note: Fees decrease significantly after a market graduates!
What's the difference between Bonding and Trading phases?
Bonding Phase:
Market is bootstrapping
Trade against virtual CPMM
Higher fees (2%)
No limit orders
Shares are "shadow shares"
Trading Phase (Graduated):
Market has reached solvency
Trade on order book
Lower fees (0.1%)
Limit + market orders
Real ERC-20 wrapped tokens
Can I sell before resolution?
Yes! You can sell your shares anytime:
During Bonding: Sell back to the bonding curve at current price minus fees
After Graduation: Place a sell order on the order book
This allows you to lock in profits or cut losses without waiting for resolution.
Shadow Liquidity
What is Shadow Liquidity?
Shadow Liquidity is our virtual AMM that enables markets without initial capital:
Markets start with 100,000 virtual YES + 100,000 virtual NO tokens
These are just numbers—no real tokens exist yet
User USDC goes into a vault
When vault can cover max payout, real tokens are minted
Learn more: Shadow Liquidity →
What are shadow shares?
Shadow shares are accounting entries that represent your claim on the vault:
They're tracked on-chain like real tokens
They convert to real tokens at graduation
They entitle you to $1 payout per share if you win
Think of them as IOUs that become real tokens once the market has enough collateral.
How does solvency work?
At 100% solvency, the vault can pay all winners
Markets graduate when they reach 100%
The 2% fee helps build this buffer naturally
Example:
Vault: $1,000
YES shares: 900
NO shares: 600
Solvency: $1,000 / 900 = 111% ✓
Resolution
How are markets resolved?
BaseCase uses the UMA Optimistic Oracle:
Anyone can propose an outcome
There's a dispute period (typically 2 hours)
If disputed, UMA token holders vote on the truth
The verified outcome becomes final
This ensures decentralized, manipulation-resistant resolution.
What if there's a dispute?
Disputes are resolved by UMA's decentralized oracle:
Disputer posts a bond
UMA token holders vote on the correct outcome
Winner gets their bond back + a reward
Loser forfeits their bond
Final outcome is enforced on-chain
This creates strong economic incentives for honest reporting.
How long until I can claim winnings?
After resolution:
If undisputed: Claimable after dispute period (~2 hours)
If disputed: Claimable after UMA vote (~24-48 hours)
Claims never expire—you can claim anytime after resolution.
Creating Markets
How do I create a market?
Click Create Market
Enter your question (clear, unambiguous)
Set the resolution date
Submit the transaction
That's it! No capital required.
What can I create markets about?
Anything that can be objectively verified:
✅ Good examples:
"Will ETH reach $5,000 by Dec 31, 2024?"
"Will the Fed cut rates in March 2024?"
"Will SpaceX launch Starship successfully in Q1?"
❌ Bad examples:
"Is Bitcoin the best cryptocurrency?" (subjective)
"Will it rain tomorrow?" (too vague—where?)
"Am I cool?" (not verifiable)
How much do creators earn?
Market creators receive 50% of all fees generated:
2% bonding fee
1%
2% graduation fee
1%
0.1% trading fee
0.05%
Popular markets can generate significant revenue for creators!
Technical
What chain is BaseCase on?
Base — Coinbase's Layer 2 built on the OP Stack.
Low fees (~$0.01 per transaction)
Fast confirmations (~2 seconds)
Ethereum security
Easy bridging from Coinbase
What collateral is accepted?
Currently: USDC only
We chose USDC because:
Stable value for accurate probability expression
Wide availability on Base
No volatility risk during market duration
Are the contracts audited?
Contracts are currently in development. Prior to mainnet launch:
Use at your own risk. The protocol is experimental software.
Still have questions?
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