AMM Trading (LMSR)

Markets configured with the LMSR (Logarithmic Market Scoring Rule) automated market maker allow trades to execute directly against the AMM, with no counterparty required. The AMM always provides a price, making it ideal for markets with lower liquidity.

How LMSR Works

The LMSR AMM uses a cost function to determine prices:

C(q) = b * ln(sum of e^(q_i / b) for each outcome i)

Where:

• q_i is the number of outstanding shares for outcome i (YES or NO).
• b is the liquidity parameter that controls price sensitivity. A larger b means prices move less per trade.

The price of a token is the partial derivative of the cost function with respect to that outcome's share quantity. As more YES tokens are bought, the YES price increases and the NO price decreases, always summing to approximately 10000 (100%).

Price Impact

Unlike orderbook markets where you can set a fixed price, AMM trades experience price impact. The more you buy, the higher the average price you pay. This is an inherent property of the LMSR formula -- each incremental share costs slightly more than the last.

Use the preview endpoint (described below) to estimate the cost and effective price before committing to a trade.

Trading Endpoint

POST /api/v1/lmsr/trade
Authorization: Bearer <token>
Content-Type: application/json

Request Body

Field	Type	Required	Description
market_id	integer	Yes	The LMSR market to trade on.
side	string	Yes	One of: "buy_yes", "sell_yes", "buy_no", "sell_no".
amount_type	string	Yes	"spend" (specify budget) or "shares" (specify share count).
amount	integer	Yes	Amount in cents. If amount_type is "spend", this is the budget. If "shares", this is the number of share-cents.
use_bonus	boolean	No	If true, deducts from bonus balance. Defaults to false.

Side Values

Side	Action
buy_yes	Buy YES tokens (long position on the event happening)
sell_yes	Sell YES tokens you hold
buy_no	Buy NO tokens (long position on the event not happening)
sell_no	Sell NO tokens you hold

Example: Buy YES Tokens

curl -X POST https://api.intotes.com/api/v1/lmsr/trade \
  -H "Authorization: Bearer eyJhbG..." \
  -H "Content-Type: application/json" \
  -d '{
    "market_id": 100,
    "side": "buy_yes",
    "amount_type": "spend",
    "amount": 50000
  }'

This spends up to 50000 cents to buy YES tokens at the current AMM price (including price impact and fees).

Preview Endpoint

Before executing a trade, use the preview endpoint to see the estimated cost, shares received, and effective price:

GET /api/v1/lmsr/preview
Authorization: Bearer <token>

Query Parameters

Parameter	Type	Required	Description
market_id	integer	Yes	The market to preview.
side	string	Yes	Same values as the trade endpoint.
amount_type	string	Yes	"spend" or "shares".
amount	integer	Yes	Amount in cents.

Example: Preview a Trade

curl "https://api.intotes.com/api/v1/lmsr/preview?\
market_id=100&\
side=buy_yes&\
amount_type=spend&\
amount=50000" \
  -H "Authorization: Bearer eyJhbG..."

The response includes the estimated number of shares you would receive, the total cost, the effective average price per share, and the fee breakdown. Always preview before large trades to understand the price impact.

Bonus Balance Restriction

When use_bonus is set to true, there is a time-based restriction for sport events: bonus balance cannot be used within 2 hours of a sport match start time. This prevents bonus abuse on events with near-certain outcomes. Attempts to use bonus balance during this window will be rejected.

Fees

The same fee percentage applies to LMSR trades as to orderbook trades:

• Buying: cost = amm_price * (1 + fee%)
• Selling: payout = amm_price * (1 - fee%)

Referral fee distribution follows the same structure (15% L1, 4% L2, 1% L3).

See Also

• Overview -- When to use AMM vs. orderbook markets
• Fees and Commissions -- Complete fee breakdown
• Positions and PnL -- Tracking positions from AMM trades