CHAPTER 4 OF 15

How a FIRM market works

Here is one market, followed start to finish.

The question: Will Lumen AI reach $25,000 in monthly recurring revenue by October 31?

1. A market gets created

Someone, the company itself or anyone in the community, proposes the market: the company, the metric (monthly recurring revenue), the target ($25,000), the deadline (October 31), and the evidence source (Lumen AI's connected Stripe account). Before the market can open, the source and the rules go through review, to make sure the source can be read consistently and the rules can only produce one answer. Once the market opens, none of this can be edited.

2. Traders see a live price

The market opens with an initial price on both sides, usually near 50 cents each, meaning the crowd starts out roughly unsure. As people trade, the price moves. If more people buy YES, the YES price rises and the NO price falls by the same amount, because YES plus NO always adds up to $1. A YES price of 58 cents means the market currently implies a 58 percent chance Lumen AI hits the target.

3. A trader takes a position

Say a trader believes Lumen AI will hit the number. They choose YES, enter a budget, and FIRM shows the exact trade before it executes: 100 shares at 60 cents each, a 1 percent fee, $60.60 total, paying $100 if they are right. They confirm, and the position lands in their portfolio with its cost basis. They can hold it, or sell some or all of it back to the market before the deadline.

4. The price keeps moving

Every trade after that one nudges the price. A large YES buy pushes the YES price up; a wave of NO selling pushes it back down. The price is never a fixed quote sitting still, and there is always a price to trade at, on both sides, no matter how thin the market is at that moment. Chapter 6 explains how that always-on pricing works.

5. The deadline arrives and the evidence decides

At 11:59 PM UTC on October 31, FIRM reads Lumen AI's connected Stripe account. Monthly recurring revenue reads $25,300, above the $25,000 target. The result is YES. If the source had been unreachable or the numbers impossible to compare to the rule written at market open, the market would be cancelled instead, and positions unwound rather than paid out one way or the other.

6. Winners get paid

Every YES share pays $1. The trader who bought 100 YES shares at 60 cents, for $60.60 all in, now holds $100. Every NO share pays $0.

That is the whole loop: a specific question, a live market, a trade, a price that moves with the crowd, and a payout decided by evidence instead of an argument.