> For the complete documentation index, see [llms.txt](https://funmarket.gitbook.io/funmarket/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://funmarket.gitbook.io/funmarket/how-funmarket-works.md).

# How FunMarket Works

### Overview

<br>

FunMarket enables users to create and participate in prediction markets through decentralized smart contracts deployed on the Solana blockchain.

<br>

Markets follow a defined lifecycle:

<br>

Create → Trade → Resolve → Claim

<br>

Each step is executed on-chain and governed by protocol rules.

***

### Step 1 — Creating a Market

<br>

Any user may create a prediction market by defining:

* A clear and unambiguous question
* A set of mutually exclusive outcomes
* A market end date
* A resolution source or criteria

<br>

Markets must be designed such that outcomes can be objectively resolved.

<br>

Once created, a market becomes immutable. Market parameters cannot be changed after deployment.

<br>

FunMarket Labs Ltd does not curate, endorse, or validate markets created by users.

***

### Step 2 — Buying Outcome Shares

<br>

Users participate in markets by purchasing outcome shares.

<br>

Each outcome has a price that represents the current market consensus for that outcome.

<br>

When a user buys shares:

* The price of the selected outcome increases
* Prices of alternative outcomes adjust accordingly
* Liquidity is provided automatically via the protocol

<br>

There is no order book. All pricing is handled algorithmically.

***

### Step 3 — Trading & Exiting Positions

<br>

Users are not required to hold shares until market resolution.

<br>

At any time before resolution, users may:

* Sell their shares back to the market
* Reallocate exposure across outcomes
* Exit positions based on changing market conditions

<br>

Prices at exit may be higher or lower than the purchase price, depending on market activity.

<br>

There is no guarantee of profit or liquidity at any given time.

***

### Step 4 — Market Resolution

<br>

Markets resolve when the predefined resolution condition is met.

<br>

Resolution is based on:

* The specified resolution source
* Objective verification criteria
* On-chain execution

<br>

Once a market is resolved:

* Winning outcomes are finalized
* Losing outcomes are invalidated
* No further trading is possible

<br>

Resolution is final and irreversible.

<br>

FunMarket Labs Ltd does not guarantee the accuracy or availability of resolution sources.

***

### Step 5 — Claiming Winnings

<br>

After resolution, users holding winning outcome shares may claim settlement according to protocol rules.

<br>

Claims are executed on-chain and depend solely on the smart contract state.

<br>

FunMarket Labs Ltd does not intermediate payouts or process settlements.

***

### Smart Contracts & Execution

<br>

All market logic is enforced by smart contracts.

<br>

This includes:

* Market creation
* Pricing logic
* Trading mechanics
* Resolution
* Settlement

<br>

Once deployed, smart contracts operate autonomously and cannot be modified by FunMarket Labs Ltd.

<br>

Users interact directly with these contracts via their wallets.

***

### Fees & Costs

<br>

Using FunMarket may involve:

* Protocol fees
* Market creation fees (if applicable)
* Blockchain transaction fees (gas)

<br>

Fees are transparently displayed in the interface and enforced by smart contracts.

<br>

Details are described in the Platform Fees section.

***

### Final Notes

<br>

FunMarket provides tools and interfaces, not outcomes.

<br>

Users are responsible for:

* Understanding market rules
* Managing risk
* Verifying resolution sources
* Ensuring compliance with applicable laws

<br>

Participation in prediction markets involves financial risk and may result in the loss of funds.


---

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