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The matching engine is the core of Likely. Every 500ms, it processes competing bundles, executes trades, and updates orderbooks across all markets.

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How It Works

Think of the matching engine as an auction house that runs continuously:
  1. Traders submit bundles during the 500ms window
  2. Engine prioritizes by tip amount and submission time
  3. Top bundles execute atomically (all-or-nothing or configured)
  4. Markets update with new prices and filled orders
  5. Next auction begins immediately

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What the Engine Tracks

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Bundle Competition

During each auction window, traders can:
  • Submit one bundle (up to 256 operations)
  • Amend their bundle to change operations or tip
  • Bribe to increase their tip and jump ahead
  • Cancel to withdraw from the auction
The twist: Amending or bribing updates your timestamp, so you lose time priority. This creates interesting strategy - do you bribe to get ahead, or keep your early timestamp?

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Execution Priority

Bundles execute in order:
  1. Highest tip goes first
  2. Oldest submission breaks ties
  3. One per user - your latest bundle replaces earlier ones
Example auction queue:

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Lazy Removal Trick

When you amend or bribe your bundle, the engine doesn’t remove your old entry from the queue (expensive operation). Instead:
  • Your new bundle gets added to the queue
  • Your old bundle stays but becomes a “ghost”
  • During execution, ghosts are skipped
This makes amending/bribing instant, even with thousands of bundles competing.

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User State Management

The engine tracks your state across all markets: Your balances:
  • Free USDC (available to trade)
  • Locked USDC (in open buy orders)
Your positions (per market):
  • Free YES shares (available to sell/merge)
  • Locked YES shares (in open sell orders)
  • Free NO shares (available to sell/merge)
  • Locked NO shares (in open sell orders)
Your orders:
  • All active limit orders across markets
  • Updated in real-time as they fill or cancel

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Auction Close Process

When the 500ms window ends: 1. Load traders
  • Engine loads all users who have bundles
  • Fast access via Redis cache
  • New traders created automatically
2. Execute by priority
  • Process bundles from highest tip to lowest
  • Each bundle either fully succeeds or fails
  • Tips distributed to market makers who filled orders
  • Failed bundle tips go to protocol liquidity fund
3. Update markets
  • Generate orderbook snapshots
  • Broadcast new prices to all clients
  • Clear auction state for next round

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Why This Design?

For traders:
  • Fair competition based on value, not speed
  • Predictable max latency (500ms)
  • Can adjust strategy mid-auction (amend/bribe)
For market makers:
  • Earn tips when filling orders
  • Privacy protection (bundles don’t expose identity)
  • Can’t be picked off by faster traders
For the platform:
  • Failed tips fund liquidity during volatility
  • Sustainable incentive structure
  • Scales to thousands of concurrent traders

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Real-Time Updates

After each auction, you receive:
  • Bundle result: Success or failure with details
  • Balance updates: New USDC and share balances
  • Order updates: Which orders filled, canceled, or placed
  • Market data: Latest orderbook snapshots
Everything updates in real-time via WebSocket, so you always know your exact state.

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Next Steps