How does liquidity incentivization work in prediction markets?

One approach gaining traction involves rewarding market participants directly through token emissions for contributing real depth to the order book. For instance, a platform might distribute rewards in native tokens plus stablecoins (like SPACE/USDC pairs) to users who strategically place limit orders that strengthen market liquidity.

The reward structure typically scales based on several factors. Orders positioned near maximum uncertainty zones—say around the $0.50 midpoint in binary markets—often qualify for premium multipliers since they're most valuable for price discovery. Time commitment matters too; the longer you're willing to lock liquidity into the market, the higher your earning multiplier becomes.

This mechanism creates an interesting dynamic: instead of passive liquidity provision, market makers get tangible incentives to maintain tight spreads exactly where they're needed most. It's a way for emerging prediction platforms to bootstrap trading depth while rewarding early participants who take on execution risk.