How Haystack PvP Markets Work: Parimutuel vs Order Book Prediction Markets
Haystack3 min read·Just now--
Most prediction markets like Polymarket and Kalshi use a fixed-odds order book. Haystack PvP uses a fundamentally different model: parimutuel pooling. It’s simpler, it’s always liquid, and it delivers the easy trading experience Haystack is built around.
Parimutuel Pool (Haystack PvP)
Everyone deposits into a shared pool. There are no counterparties, no matching engine, no limit orders, no price negotiation. When the market closes, winners split the losing side’s pool proportionally based on their share of the winning side.
You pick UP or DOWN and deposit USDC. That’s it. Odds are set by the ratio of money on each side and the time left in the market — they shift in real time as more deposits come in and time passes. Your final payout isn’t known until the market closes, but you can always enter either side, because there’s no counterparty required. Earlier deposits earn a larger share of the pool, rewarding early conviction and penalizing people who pile in once a side is more obvious.
Order Book Outcome Shares (Polymarket, Kalshi)
Shares in an outcome trade on a matching engine between buyers and sellers, just like stocks. Each share is priced between $0.00 and $1.00, reflecting the crowd’s implied probability of that outcome. If you buy YES at $0.35, you’re saying the market is underpricing a 35% chance — and if you’re right, your share pays out $1.
The key advantage over parimutuel: you can exit before resolution. If sentiment shifts, you can sell your position at a profit without waiting for the event to resolve. The tradeoff is liquidity risk — if nobody wants to buy your shares, you’re stuck. Thin markets can have wide spreads or be completely untradeable. To make markets tight requires sophisticated actors constantly providing liquidity.
The Tradeoffs
Parimutuel is simpler and always liquid — the pool always accepts deposits. But you can’t exit early, and your payout dilutes as more money piles onto your side. Order book markets give you fixed pricing at execution and the flexibility to exit, but they’re only as deep as their liquidity, and are more complicated for users.
Parimutuel pooling fits Haystack because it removes the friction order books introduce (no matching engine, no liquidity risk, no getting stuck in a thin market). You pick a side and you’re in. That’s the kind of trading experience we’re building toward. 🌾
PvP Markets: hay.app/pvp
