🔄Exchange FAQ

Frequently asked questions about all things related to betting and prediction markets.

What is the difference between a prediction market and a betting market?

Betting markets are straightforward markets where contracts based on predefined odds of different outcomes occurring can be traded

  • Prediction markets are markets where contracts that are contingent on the occurrence of events in the future can be traded

  • Betting markets are straightforward markets where contracts based on predefined odds of different outcomes occurring can be traded

What is a prediction/betting exchange?

An exchange offers a platform for participants to trade the outcome of uncertain events, whether that be sports, politics or current affairs.

Here’s how an exchange differs from a sportsbook - instead of taking a position against a bookmaker or ‘The House’, an exchange allows participants to take positions against each other by either buying or selling (sometimes referred to as ‘backing’ or ‘laying’).

Additionally, participants aren’t limited to the odds set by bookies, and have the option to back multiple different outcomes.

Using an exchange versus a bookmaker

When betting against a bookmaker, you can only take a position on the odds they offer. This includes their margin - sometimes as high as 20% - meaning they price markets in their favor with unfair odds.

Compared to a bookmaker, an exchange offers better implied odds because it is a peer-to-peer platform where participants have the ability to both buy and sell (or ‘Back’and ‘Lay’). Peer-to peer platforms result in more competitive odds because markets are driven by supply and demand.

When you deal with a bookmaker, they are the only seller. Therefore, they can artificially fix prices at uncompetitive rates at which no other sellers are willing to step in.

However, with an exchange, there are arbitrage opportunities (risk-free profits) to sell or buy positions when prices go above or below the fair price. So, the market effectively ‘rewards’ clever participants for keeping prices competitive by trading fluctuations in markets over time – just like on an asset exchange.

This means you generally have a much higher expected value (EV) when trading on a exchange, as compared to taking a comparable position against a bookmaker.

Exchanges gives bettors more freedom and better price/odds. They also won’t restrict your account just because you’re winning, unlike traditional bookmakers.

Another key difference between exchanges and bookmakers is that users can also ‘sell’ positions (also referred to as ‘laying’). This allows the participant to profit if they believe the outcome won’t occur.

What markets and events are available?

Aver currently supports a long list of markets and events, which will continue to grow over time.

You can find more information on markets here or you can browse the list of active markets on the Aver Mainnet application.

If you are interested in suggesting markets not actively traded currently, you can make a suggestion to the community via Twitter or Discord

Different types of orders

Aver currently only supports limit orders.

Support for more complex order types, including Market, ‘Fill-or-Kill’ (Immediate-or-Cancel) and Post-Only order types will be coming in the near future.

Limit Orders A limit order is an order to buy or sell at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. If there aren’t sufficient existing orders on the book to match your desired trades, your order will sit on the orderbook until participants that are willing to trade at that price arrive.

Market Order A market order is an order to buy or sell immediately. This type of order guarantees that the order will be executed (up to the amount currently available on the orderbook), but does not guarantee the final price (i.e. depending on the size of the order, you may be forced to pay a much less competitive price to obtain sufficient counterparties to the trade).

What is a market maker?

The term ‘market maker’ refers to a firm or individual who actively quotes two-sided markets in a particular security, providing bids and asks (offers to buy and sell) along with the market size of each.

Market makers provide a market with liquidity and depth while profiting from the difference in the bid-ask spread (the difference between buy and sell price). They are generally willing to be both buyers and sellers of any given outcome in the market, for the right price.

Market making is a crucial function for any exchange platform to operate, and it can be a very lucrative activity - if carried out correctly. However, it is not risk-free, as market makers are exposed to the risk of holding assets/positions that move against them - seeing a decline in the value of a position after it has been purchased from a seller and before it's sold to a buyer.

What are some important considerations around placing orders and interacting with markets?

When using Aver Exchange, please have the following in mind:

  • One winner from 2 and 3 outcome markets will be most common.

  • Markets can be voided for certain reasons - e.g. a date is moved by more than two weeks, an event is cancelled, there has been an unanticipated change to the outcomes listed, etc.

  • Pay attention to the result you’re speculating on - is it the winner of a matchup? the score difference?, etc.

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