Mike Hale Melee, a Solana-based prediction market startup, has published the public litepaper for its Parimutuel Market Maker (PMM), a liquidity design built to make any prediction market tradable from its first dollar without professional market makers. The company, which raised $3.5 million in a pre-seed round, is betting the PMM can finally open the long tail of markets that curated platforms like Polymarket and Kalshi never list.
Prediction markets are having a moment: total monthly volume topped $50 billion in June 2026, the first month of the FIFA World Cup, with Kalshi alone accounting for $31 billion. Almost all of that trading sits in three buckets: politics, sports, and crypto. Markets on creators, culture, science, and internet moments barely exist, and Melee argues that's a plumbing problem, not a demand problem.
"PMMs will unlock permissionless market creation at scale for the first time. This is critical for the longevity of a prediction market platform."
— Nick Preszler, co-founder, Melee
What is a Parimutuel Market Maker?
A parimutuel market maker (PMM) is a liquidity mechanism that pairs parimutuel settlement with price curves that react to the entire state of a market's pool. In a parimutuel system, every bet goes into a shared pool and winners are paid out of the losing side, so there's no house taking the other side of your trade. The first person to buy into an outcome creates liquidity for everyone who follows.
That isn't a new idea. In 1867, Joseph Oller, who also co-founded the legendary Moulin Rouge nightclub in Paris, invented parimutuel betting.
Tired of bookmakers who set the odds and skimmed the margin, his fix was to let bettors set the odds themselves by pooling every wager, then splitting the pool among the winners. France liked it enough to make it the only legal way to bet on horse races, and the design still runs racetracks worldwide.
Melee's addition is what it calls mutually-aware outcome price curves.
Each outcome has a price that's a function of the full pool rather than its own side alone, so buying one outcome moves the prices of the others in the same step. The practical effect is a live, tradable price from the very first dollar, with every dollar in the market coming from another participant rather than a market-making firm. Markets can carry two or more mutually exclusive outcomes.
Where order books and AMMs fell short
The PMM is Melee's answer to two earlier approaches that both hit walls on binary, resolving markets.
Automated market makers came first, copying what Uniswap did for tokens: drop assets in a pool, let a formula set the price, skip the order book. They broke on prediction markets because every market resolves. One side ends up worth a dollar and the other worth zero, so as resolution nears, the pool rebalances into the losing side. What DeFi calls impermanent loss becomes permanent loss for liquidity providers.
Order books fixed that capital destruction but introduced a dependency: professional market makers.
Someone has to quote prices, and those firms show up for presidential elections and the Super Bowl, not for a market on whether a mid-tier streamer hits a subscriber milestone. A CESifo study of Kalshi found returns and liquidity concentrate heavily on the market-maker side, with takers losing about 32% on average.
How the PMM fixes parimutuel's oldest flaw
Raw parimutuel has a 150-year-old problem of dilution. Because payouts depend on the final pool, a big late bet can crush the returns of people who were early and right.
Melee learned this lesson the hard way.
In its October 2025 alpha, which used a simpler parimutuel-plus-bonding-curve model, a $50,000 late bet in a football market cut earlier backers' projected payouts by more than 90%, according to co-founder and CEO @itsmaximilian. The mechanism worked as designed, but the experience was terrible.
The PMM is the redesign that came out of that failure, and it's a different animal from the alpha. Three behaviors matter:
A minimum-return floor set at entry. When you buy in, the PMM quotes a floor on your return that's fixed at that moment and can only rise. Later trades are priced to preserve every floor already outstanding, so money arriving after you can't erode your position.
Continuous trading with an exit. Markets stay open through the event instead of closing beforehand. You can leave before resolution through a cashout service, backed by a liquidity vault, that quotes a price at a discount. That discount is the cost of on-demand liquidity, and the exit depends on how deep the vault is.
Rewards for absorbing volatility. A position that stays in the pool while opposing money flows in is acting as the counterparty for later traders. The PMM captures that activity as counterparty-liquidity rewards, which raise the position's floor. Being early and staying in is what earns the upside.
Melee published results from 126 simulated 15-minute Bitcoin markets to test the design. In every simulated market, each qualifying winning position settled at or above the floor quoted at entry. Against a comparable position on another platform, the PMM position returned more in 65.1% of markets, by an average of 9.6% and a median of 24.4%, though the advantage ranged from negative 48.9% to positive 67.2%.
What PMM unlocks
This is where the long tail comes back. Because a market is liquid from dollar one, a creator can spin one up without pitching a listings team or waiting for a market maker. Melee lets creators earn a share of the platform fees their markets generate, the same incentive loop that made Pump.fun explosive for token launches.
That raises an obvious worry with permissionless creation: duplicate and spammy markets, the failure mode that sank earlier open platforms. Melee's plan, per maximilian, is tiered and still being tuned. Large event markets like sports games will use claimable, template-based slots to prevent duplicates. Long-tail markets will be "a battle of creators with best distribution," with UX warnings when a similar market already exists. Opinion markets, he expects, will be "a free for all similar to memecoins," where wording and timing decide which market catches on and the algorithm self-selects.
For Solana builders watching the prediction-market race, the PMM is best read as a liquidity primitive rather than a single product. Melee's framing is that the market type and the liquidity structure are separate choices, and the PMM slots in as a third option next to AMMs and order books, purpose-built for outcomes that resolve.
Read the full litepaper:
The Parimutuel Market Maker: A New Market Structure for Permissionless Prediction Markets