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
⚠️ BONDING PHASE RISK: If a market fails to graduate before its deadline, you receive a pro-rata refund (typically 80-95%), NOT a full refund. Any slippage may reduce your return. Only deposit what you can afford to lose.
How do I make money?
You profit when your prediction is correct. With Winner Profit Guarantee, winners receive exactly $1 per winning share:
100 YES
$0.60
YES wins
$100 ($1 × 100 shares)
100 YES
$0.60
NO wins
$0
All winners profit. Since you can never pay more than $1/share (the $1 ceiling), winning always means profit. Bonding phase participants (OGs) also receive bonus payouts from excess vault funds.
Alternatively, you can sell your shares before resolution if the market moves in your favor.
What are the fees?
Bonding (Buy/Sell)
0%
No fees during bonding
Graduation
2.0%
50% Protocol / 25% Stakers / 25% Creator
Order Book (Taker)
~0.2%
50% Protocol / 25% Stakers / 25% Creator
Order Book (Maker)
0%
—
Note: Fees are collected at graduation and on order book trades, not during bonding!
What's the difference between Bonding and Trading phases?
Bonding Phase:
Market is bootstrapping
Trade against virtual CPMM
No fees (0%)
No limit orders
Tokens are soulbound (non-transferable)
Trading Phase (Graduated):
Market has reached solvency + 20% min per side
Trade on order book
Low fees (~0.2% taker)
Limit + market orders
Tokens become transferable ERC-20
Can I sell before resolution?
Yes! You can sell your tokens anytime:
During Bonding: Sell back to the bonding curve at current price (no fees)
After Graduation: Place a sell order on the order book (~0.2% taker fee)
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 ERC-20 tokens that are soulbound during bonding:
They're minted to your address when you buy
They're non-transferable until graduation
They entitle you to a pro-rata payout if your side wins
At graduation, they become fully transferable ERC-20 tokens.
How does solvency work?
At 100% solvency, the vault can pay all winners
Markets also require 20% min on each side
No fees during bonding; solvency builds through balanced trading
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 25% of protocol fees generated:
2% graduation fee
0.5%
~0.2% trading fee
~0.05%
Note: No fees during bonding phase. Fees only collected at graduation and on order book trades.
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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