Mini Prediction Market (LMSR)

Single hardcoded binary market on Hanson's LMSR. In-memory, no DB/blockchain/auth.

• Backend: Node.js + NestJS
• Frontend: React + TypeScript + Vite + Tailwind + shadcn/ui

Run

# Terminal 1
cd backend && npm install && npm run start:dev   # http://localhost:3000

# Terminal 2
cd frontend && npm install && npm run dev        # http://localhost:5173

Open http://localhost:5173 (Vite proxies /api/* to the backend, no CORS setup needed).

Tests: cd backend && npm test (pricing module — golden vector, invariants, overflow, path-independence).

AMM / rounding decisions & trade-offs

• Cost function uses log-sum-exp; spot price uses the stable sigmoid form — both avoid overflow at large q.
• priceImpact isn't defined in the brief — used (avgPrice - spotPriceBefore) / spotPriceBefore.
• API casing matches the brief literally: snake_case for GET /market (q_yes, p_yes), camelCase for /quote (avgPrice). Internal code is camelCase everywhere; only the response boundary maps.
• Shares can be fractional (LMSR is continuous), capped at 2 decimals, validated on both ends.
• No explicit lock on trade() — it's fully synchronous with no await in the critical section, so JS already prevents interleaving here; would need one if persistence/async I/O were added later.
• Sell (bonus) reuses /quote and /trade via an optional side: 'BUY'|'SELL' field (negative delta), not a separate endpoint.
• Resolve/redeem (bonus): resolve is one-time (OPEN → RESOLVED) and blocks further trading; redeem pays out winning-side holdings at $1/share into collateral and zeroes both sides (losing shares become worthless). redeem is naturally idempotent — a second call pays out $0 since holdings are already zero.

With more time

• Move shared market/portfolio state into a Zustand store instead of prop-drilling through App.tsx, so mutations (trade/resolve/redeem) can trigger a refetch from anywhere without threading callbacks down the tree.
• Playwright e2e for the quote → confirm → portfolio flow.
• Price-history chart.

Assumptions

• Single demo user; state resets on server restart (as allowed by the brief).
• b = 100 fixed, not configurable.