> For the complete documentation index, see [llms.txt](https://docs.overtime.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.overtime.io/learn-about-overtime/overtime-amm-and-liquidity-mechanics.md).

# Overtime AMM and Liquidity Mechanics

The Overtime Automated Market Maker (AMM) serves as the core liquidity and pricing engine for the protocol, enabling fully onchain, continuous sports market creation and trading. Unlike traditional sportsbooks that rely on centralized liquidity desks, Overtime’s AMM dynamically manages exposure, pricing, and fees through a transparent, algorithmic framework.

### Fees and Pricing

The AMM sources implied probabilities for each market directly from global odds providers and brings them onchain through Chainlink oracle nodes. These odds form the pricing foundation for every market offered by Overtime. On top of the oracle-fed odds, the AMM applies a **protocol fee**, currently set at **2%**, which funds the Overtime fee pool. The AMM’s pricing continuously tracks real-time global odds data, ensuring that Overtime remains competitive with leading traditional sportsbooks at all times.\
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Overtime also features a native **fee-sharing mechanism** that automatically redirects **half of the protocol fees generated by partner-driven trading activity** to the corresponding integrator or gold partner wallet. This onchain kickback system rewards ecosystem participants like MetaMask for driving trading volume and provides a verifiable, continuous revenue stream directly tied to activity within the protocol.\
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In addition, users who trade using **Overtime’s native token ($OVER)** as collateral instead of USDC, ETH, or other assets benefit from a **reduced margin by design**, resulting in more favorable pricing and higher net payouts. This incentive structure promotes organic token utility, enhances platform stickiness, and aligns all ecosystem participants.

### Liquidity and Risk Management

Each market within Overtime is assigned a predefined **risk limit**, representing the maximum directional exposure the AMM is willing to take against traders for that market. Once this limit is reached on one side of a market, the AMM naturally stops offering additional liquidity for that direction until offsetting demand emerges.

When traders begin taking positions on the opposite side, that inflow of orders **organically rebalances the AMM’s exposure**, gradually reopening liquidity on the previously capped side. This self-correcting mechanism keeps the AMM’s risk profile adaptive to market flow without requiring manual intervention or external adjustment.

When trading demand remains balanced between both sides, the AMM operates in a **delta-neutral** state, effectively facilitating a peer-vs-peer outcome while minimizing directional risk to the liquidity pool. This design ensures continuous capital efficiency and preserves the integrity of the Pool-vs-Peer model across all active markets.

#### Who Provides the Liquidity

The **Overtime treasury is the sole liquidity provider** across all Overtime liquidity pools. [OIP-265](https://github.com/thales-markets/overtime-improvement-proposals/blob/main/OIPs/OIP-265.md), passed in June 2026, ended public liquidity provision:<br>

* New external deposits into the Overtime liquidity pools are closed.
* The protocol has requested the withdrawal of all remaining external liquidity, and each provider's withdrawable balance is returned directly to their own wallet. No funds are confiscated.
* The treasury now carries the full risk of the book and keeps the full return. Pool profit that used to be shared with external providers, roughly half, now stays with the protocol, which directs revenue into **$OVER buybacks and burns**.

The same treasury liquidity also backs Overtime's integrations with **Polymarket** and **Mollybet**. On Polymarket, Overtime acts as a market maker for parlay-style Combos: Polymarket prices Combos through a request-for-quote (RFQ) system, Overtime quotes them with the same pricing engine it uses on its own platform, and when a quote is filled, the matching exposure is placed on Overtime's own book.

{% hint style="info" %}
OIP-265 is reversible. If Overtime ever needs external liquidity again, public deposits can be reopened through governance without redeploying the liquidity contracts.
{% endhint %}