How it Works?

The synthetic market prices will be stochastic Markov processes with the prices moving up or down every second, with the size of each movement being derived from random cryptographic hashes.

Each synthetic market can be customized by changing key variables such as volatility, drift or Bernoulli factors.

Synthetic markets will follow either Arithmetic Brownian Motion (ABM) or Geometric Brownian Motion (GBM).

ABM pricing formula:

$$P_{t+1} = P_t + \underbrace{\mu \Delta t}_{\text{drift}} + \underbrace{\sigma \sqrt{\Delta t}\, Z_t}_{\text{noise}} - \underbrace{\frac{\mu \Delta t}{p} B_t}_{\text{Bernoulli jump}}$$

Where:

• P_t​ = current price

• P_t+1​ = next tick's price

• μ = drift parameter

• σ = standard deviation

• Z_t​ = standard-normal noise

• p = probability of a jump

• B_t​ = Bernoulli jump indicator

• Δt=1 second

Traders can then either long or short the price and cash out at anytime to profit from fluctuation in the price.