> ## Documentation Index
> Fetch the complete documentation index at: https://docs.magicblock.gg/llms.txt
> Use this file to discover all available pages before exploring further.

# Prediction Markets and Trading

> Architecture guide for prediction markets, leveraged trading, and settlement using Ephemeral Rollups, session keys, SPL token custody, pricing oracles, cranks, and Magic Actions.

Build the latency-sensitive trading loop on an Ephemeral Rollup (ER), then commit the state or settle
funds on Solana when the result must become durable. This guide maps each protocol requirement to the
MagicBlock feature that solves it.

<Warning>
  The linked examples demonstrate integration patterns, not a production risk engine. A leveraged
  protocol still needs audited pricing, liquidity, solvency, liquidation, pause, and recovery rules.
</Warning>

## Choose the components

| Protocol requirement                             | MagicBlock feature        | Start here                                                                      |
| ------------------------------------------------ | ------------------------- | ------------------------------------------------------------------------------- |
| Frequent orders, bets, or position updates       | Ephemeral Rollups         | [ER quickstart](/pages/ephemeral-rollups-ers/how-to-guide/quickstart)           |
| Restricted position or strategy visibility       | Private Ephemeral Rollups | [PER quickstart](/pages/private-ephemeral-rollups-pers/how-to-guide/quickstart) |
| Repeated actions without wallet prompts          | Session Keys              | [Session Keys overview](/pages/tools/session-keys/introduction)                 |
| Collateral, custody, pool liquidity, and payouts | Ephemeral SPL Token       | [Token model](/pages/ephemeral-spl-token/overview)                              |
| Prices and liquidation inputs                    | Pricing Oracle            | [Oracle overview](/pages/tools/oracle/introduction)                             |
| Expiry, liquidation, and settlement checks       | Cranks                    | [Cranks overview](/pages/tools/crank/introduction)                              |
| Base-layer payout after an ER commit             | Magic Actions             | [Magic Actions overview](/pages/ephemeral-rollups-ers/magic-actions/overview)   |

## Reference architecture

<Steps>
  <Step title="Initialize durable market state">
    Create market configuration, authorities, collateral mint, and base-layer custody accounts. Keep
    administrative controls and durable settlement records on Solana.
  </Step>

  <Step title="Delegate the latency-sensitive state">
    Delegate position, order, or bet accounts to the ER. Use a PER when the contents or allowed
    participants must be restricted inside a TEE-backed validator.
  </Step>

  <Step title="Authorize repeated user actions">
    Scope a session key to the protocol instructions, duration, and limits the user needs. Do not
    grant the session unrestricted control of the user's assets. SPL Token does not understand
    session tokens, so token movement may also require a one-time approval to a constrained program
    authority, as shown in the binary prediction example.
  </Step>

  <Step title="Fund custody and execute">
    Deposit collateral into the Global Vault and use program-controlled eATAs when funds must move at
    ER speed. Read the configured oracle account inside each price-sensitive instruction.
  </Step>

  <Step title="Automate time-sensitive checks">
    Schedule cranks for expiry, liquidation, or periodic settlement logic. Make every scheduled
    instruction safe to retry and validate the current market state before changing it.
  </Step>

  <Step title="Commit and settle">
    Commit final state while remaining delegated for continued trading, or commit and undelegate when
    the market closes. Use a Magic Action when the commit must trigger a base-layer payout or another
    Solana instruction.
  </Step>
</Steps>

## Choose a custody model

| Model                                       | Best for                                                       | Trade-off                                                                   |
| ------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------------------------------- |
| **Program-controlled eATA custody**         | Stakes, collateral, and payouts that move repeatedly on the ER | Requires the Ephemeral SPL Token lifecycle and explicit withdrawal handling |
| **Base-layer custody + post-commit payout** | Funds that should remain in normal ATAs until settlement       | Token movement waits for commit, but base-layer custody stays authoritative |

The [Smart Contract Integration guide](/pages/ephemeral-spl-token/smart-contract-integration)
implements both patterns and links the binary-prediction reference.

## Prepare for production

Before moving from a reference example to a production protocol, define:

* oracle freshness, confidence, and failure behavior;
* collateral, exposure, and liquidation rules when the product requires them;
* maximum position, market exposure, and utilization limits;
* liquidity and payout reserves under worst-case moves;
* fees, rounding, and integer overflow boundaries;
* crank failure, retry, and manual recovery paths;
* commit frequency and the authoritative state during settlement;
* emergency pause, close-only, and controlled unwind behavior.

Use PER only when restricted visibility is a protocol requirement. Privacy does not replace solvency,
oracle validation, or authorization checks.

## Start with working examples

<CardGroup cols={2}>
  <Card title="Binary Prediction" icon="chart-line" href="/pages/templates/binary-prediction" iconType="duotone">
    Session-authorized bets, real-time prices, eATA pool custody, and expiry-based settlement.
  </Card>

  <Card title="Oracle-Priced Purchase" icon="cart-shopping" href="/pages/templates/oracle-priced-purchase" iconType="duotone">
    A smaller example focused on freshness checks, feed validation, and slippage protection.
  </Card>

  <Card title="Sealed-Bid Auction" icon="gavel" href="/pages/templates/sealed-bid-auction" iconType="duotone">
    Hidden bids on a Private Ephemeral Rollup with two-layer SPL escrow and on-chain winner selection.
  </Card>
</CardGroup>

Build the binary prediction example first. Add crank-driven settlement next, then choose ER custody or
a post-commit base-layer payout based on where your protocol needs funds to remain authoritative.