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update for cancellation
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kirilaa authored Aug 31, 2022
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11 changes: 3 additions & 8 deletions TIPs/TIP-72.md
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Expand Up @@ -31,14 +31,9 @@ For this to be economically feasible, the underlying Sport Markets AMM will have
The parlay AMM has to keep track of how much it can risk in total and make sure its solvent at any given time (it can not mint a new Parlay if it doesnt have enough sUSD to collaterize it).

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TBD: If one or more markets in a parlay result in cancellation, usual approach in centralized books is to ignore that market, but multiple the odds for other winning markets in the parlay. However, since we are collaterizing each position of a parlay, the Parlay AMM will still be able to claim back what it paid for such a market. This needs more thinking on how to handle it exactly. I think the way it should be done is that not every position needs to be collaterized with an equal amount in the Parlay AMM, but rather it should be a function of individual odds per position.
0.25 =>4x
0.5 =>2x
0.125 =>8x
Parlay token price = 0.015625 = 64x

if the first game is cancelled the return should be 16x = 0.25
if both first and second game are cancelled the return should be 8x = 0.125
TBD: If one or more markets in a parlay result in cancellation, usual approach in centralized books is to ignore that market, but multiple the odds for other winning markets in the parlay.
The current implementation implements this logic. The cancelled game is included with odd `1` in the total odds calculation. If the parlay has four games with odds `[ 0.6, 0.5, 0.3, 0.7]` with total product of `0.063` and the third game is cancelled, the parlay will result in the `[ 0.6, 0.5, 1, 0.7]` with total product of `0.21`.
In the case of winning parlay with cancelled positions, the user obtains the expected amount while the Parlay AMM is refunded for the cancelled positions.

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