Payouts and fees

The bet form shows the gross payout. This is the total amount returned for a winning bet, including the original stake. The profit is gross payout minus stake.

How the probability is calculated

The quote service estimates the probability that the settlement price will finish above the strike. It uses:

S: the latest live market price.
K: the first valid market price at the start of the round.
sigma: measured log-return volatility per square-root second.
t: seconds left until settlement.

The current provisional model calculates:

V = sigma² × t
z = (ln(S / K) - 0.5 × V) / sqrt(V)
Up probability = NormalCDF(z)
Down probability = 1 - Up probability

NormalCDF converts the price distance into a value between zero and one. For example, 0.70 means an estimated 70% Up chance. Up and Down probabilities always add to 100%.

How probability becomes a multiplier

For the selected side, let p be its estimated probability:

raw gross multiplier = 0.95 / p
gross payout = stake × gross multiplier
profit on a win = gross payout - stake

The implementation uses parts per million, or PPM, so it can use fixed-point integer arithmetic:

multiplierPpm = floor(950,000 × 1,000,000 / probabilityPpm)
grossPayoutUnits = floor(stakeUnits × multiplierPpm / 1,000,000)

The floor operation is applied at six-decimal PPM precision. It does not round the displayed multiplier down to a whole number.

LaunchLab currently uses the raw model probability. Up and Down remain complementary. A quote stops if either side is outside the contract's 5% to 95% safety range. This avoids showing a payout that the contract cannot accept.

10% Up chanceUp 9.50xDown 1.06x at 90%

50% Up chanceUp 1.90xDown 1.90x at 50%

90% Up chanceUp 1.06xDown 9.50x at 10%

The vertical scale is logarithmic so that 1x to 19x remains readable. The shaded ends are the no-quote region. This chart applies only the payout formula; it does not claim that the estimated probability is correct.

The chart uses the same outcome colors as the market page: green is Up above the strike, and red is Down below the strike. The selected side is emphasized, but both possible outcomes remain visible.

The 0.95 factor means that a correctly estimated probability has an expected gross return close to 95% before integer rounding:

expected gross return = p × (0.95 / p) = 0.95
expected pricing margin = 1 - 0.95 = 0.05, or 5%

For a 10 USDG stake at a 50% probability:

multiplier = 0.95 / 0.50 = 1.90x
gross payout on a win = 10 × 1.90 = 19 USDG
profit on a win = 19 - 10 = 9 USDG
expected gross return = 50% × 19 = 9.50 USDG

The intended economic split of that 5% margin is:

2.5% supports vault liquidity.
2.5% is protocol margin.

This is an expected pricing margin across many correctly priced bets. It is not a guaranteed fee amount on each individual result.

Why multipliers change near settlement

Uncertainty usually decreases as the round approaches settlement. If the price stays above the strike, the Up probability increases, so the Up multiplier decreases. At the same time, the Down probability decreases, so the Down multiplier increases. Below the strike, the directions reverse.

Both fair multipliers do not normally decrease together. Up and Down are complementary outcomes: when one becomes more likely, the other becomes less likely. Making both multipliers decrease would add a larger time-based protocol margin. It would not be probability decay.

Price and volatility can also change. Therefore, a multiplier does not have to move in one direction through the full round.

How to read the live market chart

The chart has one authoritative live market-price series.

The large price, chart line, round strike, Up or Down state, probability, and settlement all use this same series.
The line is visually smoothed between exact observations. This styling does not change any value used for pricing or settlement.
The horizontal strike line is the round-open settlement threshold. Green shows prices above the strike, where Up is winning. Red shows prices below the strike, where Down is winning.

LaunchLab does not average the mark price with trade candles or use candles as a hidden fallback. On a cold start, the quote service waits for enough live market-price observations. The strike must be a price observation no more than 7.5 seconds after the exact round start.

The contract result uses the first valid price observation at or after the exact round end. If no such observation arrives during the 10-second result window, the service cancels the round instead of using an older value. LaunchLab also pauses new quotes when the latest price observation is more than 7.5 seconds old.

Model validation

The 95% return formula can be arithmetically correct while its probability estimate is wrong. LaunchLab tests these separately:

Arithmetic tests check integer rounding, complementary outcomes, and the 19x maximum.
Causal backtests replay each quote with only information available at that timestamp.
Calibration tests compare predicted probabilities with settled outcomes by market, horizon, and time remaining.
Edge tests measure theoretical return, realized hold, quote coverage, data gaps, and adverse selection.

Model validation uses timestamped history from the same market-price series used for strikes and settlement.

What the displayed numbers mean

If a 10 USDG stake has a 1.90x gross multiplier:

The gross payout is 19 USDG.
The profit on a win is 9 USDG.
The loss on a loss is 10 USDG.
The exact protocol fee is set by the accepted trade and contract checks.

The displayed multiplier can change with market probability, available vault capacity, and risk limits. Your signed minimum multiplier limits how far the backend fill can move before the transaction is rejected.

When betting closes

A 60-second market accepts bets for its first 50 seconds. Betting closes 10 seconds before settlement.
A five-minute market accepts bets for its first four minutes. Betting closes 60 seconds before settlement.

The multiplier model uses the time remaining until settlement. The lock only stops new bets. It does not change the settlement time or payout formula.

These timings and the pricing bounds are published by the redeployed LaunchLab vault v1. The quote service checks the running vault version and both entry windows before it signs a bet. If the deployed vault does not match, betting stops and the app shows the compatibility error.

Where winnings go

Winnings stay inside the vault. They increase the assets that your shares can claim. They are not sent as loose USDG to your smart account.