PMF

What is Byreal PMF?

Byreal PMF (Prediction Market Framework) is Byreal’s continuous, on-chain prediction market system. Unlike traditional prediction markets that end after one resolution, PMF operates as a perpetual, rolling prediction market—markets never close, and user positions persist across cycles.

Each market periodically enters an Alignment, where the system anchors the market price to the real-world oracle value. After the Alignment, the market immediately continues with a fresh cycle, allowing users to hold, adjust, or exit their positions anytime.

The first market built on PMF is the Greed & Fear Index Market (0–100). More markets - tracking indexes, metrics, or on-chain indicators - can be added using the same framework.

About the Greed & Fear Index (G&F)

The Greed & Fear Index captures the emotional cycle of the crypto market and helps identify whether traders are behaving fearfully or greedily. It is one of the most widely referenced sentiment indicators in the crypto industry.

The Byreal Greed & Fear Index measures market sentiment on a scale from 0 to 100, where:

• 0 = Extreme Fear

• 100 = Extreme Greed

The index is derived from multiple market and behavioral indicators, including: market volatility, trading volume & momentum, social sentiment, trend/search data.

Oracle Source

Byreal uses one of the most widely referenced sentiment indicators in crypto as its oracle: the Crypto Fear & Greed Index from alternative.me.

At each Alignment Event:

• The system fetches the latest index value from Alternative.me

• This value becomes the oracle value (I_oracle)

• The PMF market is automatically aligned to match this value

• The next prediction cycle begins immediately from the updated price

This ensures that alignment remains transparent, verifiable, and resistant to manipulation.

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How It Works

At its core, Byreal PMF is a continuous prediction market where price reflects the collective expectation of the index. You profit by correctly anticipating the direction of the market.

There are two tokens - Greed and Fear. Their prices fluctuate dynamically based on user trading and periodic Alignment events.

1. Trading (Anytime)

• Buy Greed: If you believe the real index will be higher than the current market price.

• Buy Fear: If you believe the real index will be lower than the current market price.

Every trade impacts the price:

• Buying Greed (or Selling Fear) pushes the price higher.

• Buying Fear (or Selling Greed) pushes the price lower.

Note: Greed and Fear prices move like a see-saw. When the Index Price goes up, Greed tokens become more expensive and Fear tokens become cheaper (and vice versa).

You can sell your position anytime to lock in profits without waiting for alignment.

2. Alignment (Periodic)

At specific intervals, the market undergoes an Alignment. The system automatically recalibrates the market price to match the oracle.

• Holding Through Alignment: If you hold your tokens through this event, your position value updates automatically based on the real outcome. No claiming is required - the market simply continues to the next cycle.

The Pricing Model

Each market predicts a numerical value. For the Greed & Fear Index (0–100), the market price is mapped directly from the UP token price:

$$I_{expected} = 100 \times P_{up}$$

Examples:

• P_UP = 0.20 → expected index ≈ 20

• P_UP = 0.55 → expected index ≈ 55

• P_UP = 0.80 → expected index ≈ 80

Trading logic:

• Buy Greed → if you believe the G&F index will be higher than the market expects

• Buy Fear → if you believe the G&F index will be lower than the market expects

The price is calculated using an LMSR automated market maker, which ensures smooth price changes and continuous liquidity - meaning any buy or sell will always move the price in a predictable way.

Continuous Trading

The PMF market is always open. You can:

• Enter: Buy Greed or Fear at any time

• Exit: Sell your tokens whenever you want

• Hold: Keep your tokens through Alignment to automatically roll into the next cycle

There is no expiration and no mandatory claim step. Your token value updates automatically during alignment.

The Alignment Mechanism

In Byreal PMF, Alignment is not an expiration event—it is a calibration event.

At the scheduled alignment time, the system anchors the prediction market to oracle by adjusting the market price to match the official oracle value.

During Alignment, the system performs an automated internal rebalance:

1. if $I_{oracle} > I_{market}$

   1. The system automatically sells Fear and buys Greed pushing the UP price upward until it match the oracles.

   2. UP holders gain value, because the market corrects upward in their favor.

2. if the market overestimated the real value $I_{oracle} < I_{market}$

   1. The system automatically sells Greed and buys Fear pushing the UP price downward until it match the oracles.

   2. Down holders gain value, because the market corrects downward in their favor.

Depletion Events: What Happens If One Side Has Insufficient Tokens?

In rare cases, the system may discover that one side (e.g., the Greed side) does not hold enough liquidity to rebalance the price fully to the Oracle value.

Example: The system needs to sell a large amount of Fear to push the price upward to match the Oracle, but the Fear supply in the pool is exhausted.

Resolution: The affected token side (e.g., Fear) is reduced to zero value. This is equivalent to a complete loss for that side - similar to being liquidated in a perpetual futures market.

1. The value of the losing token goes to 0.

2. The system resets and issues a new token.

This mechanism ensures that

1. The market can continue operating without halting.

2. Users can immediately trade the newly issued tokens.

3. Future cycles remain predictable and stable.

This mechanism ensures that the market aligns as closely as possible to the oracle value, maximizing the correction even in conditions of extreme market imbalance.

4. FAQ

Does the market end?

No. Byreal PMF is a continuous market. There is no expiration date where the pool dissolves. The Alignment is just a momentary "sync" with reality, after which the next cycle begins immediately.

What happens to my funds after alignment?

If you do not sell, your funds remain in the pool.

• If you were on the winning side, your position value increases.

• If you were on the losing side, your position value decreases.

In both cases, you continue holding your Greed or Fear tokens, which are now betting on the movement relative to the new price.

Can I sell my position before Alignment?

Yes. You can buy or sell Greed/Fear tokens at any time. You do not need to wait for the Alignment event to exit your position.

Can I lose all my money?

Like any market, values can fluctuate. In rare Extreme Depletion Events, if the market moves overwhelmingly against your position during Alignment, the value of the losing token side may drop to zero to allow the system to reset and continue.

Why can’t I trade during Alignment?

Trading is temporarily paused around the daily Alignment window. This happens because our oracle provider — alternative.me — does not always update the Fear & Greed Index exactly at 00:00 UTC.

To prevent price manipulation and ensure the market aligns to the latest verified index value, trading will be paused briefly until Alignment is complete.

Once the updated index is fetched and the system settles the market, trading will resume automatically.

Is this a binary (Yes/No) market?

No. Unlike binary markets that settle at either 0 or 1, Byreal is a Continuous Market. The price reflects the expected level of the index (0-100). You are trading on how high or low the index will be, not just a binary outcome.