> For the complete documentation index, see [llms.txt](https://docs.spend.market/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.spend.market/markets/elastic-markets/phase-1-early-pool.md).

# Phase 1: Early Pool

Every market opens here. Everyone contributes to a shared pot, and when the outcome lands, winners split it in proportion to what they put in.

**How pricing works.** Price is implied by the pool ratio. If 70% of the collateral sits on YES, YES costs $0.70 and NO costs $0.30. Prices always sum to $1.00. Every position shifts the pool, which shifts the price: buy YES, and YES gets more expensive while NO gets cheaper.

> **Example.** YES opens with $7,000 committed, NO with $3,000, so YES is priced at $0.70. You commit $700 to YES. By close, more capital has come in: $9,000 on YES, $4,000 on NO, a $13,000 pot. YES resolves true. The winning side splits the whole pot in proportion to stake. Your $700 is 7.8% of the $9,000 YES side, so you take 7.8% of the $13,000 pot, about $1,011 gross. The 1% net-profit fee applies only to your winnings: your profit is $1,011 minus your $700 stake, or $311, so the fee is about $3. See [Fees](/markets/fees.md). That leaves about $1,008 net on a $700 stake.

**Locked collateral.** Once you commit, your capital is locked until the market resolves (payouts go to winners) or graduates (your position becomes tradable on the book). If you want the ability to exit early, trade in Phase 2 markets. Phase 1 is for conviction positions.

**Yield on locked capital.** While locked, your collateral earns yield. Pooled capital is routed into an ERC-4626 yield vault provided and secured by Morpho. Your share of accrued yield is tracked from your entry and passed through to you in full, pro-rata, at whichever comes first: resolution or graduation.

**Early-buyer tiering.** A small tiered entry fee applies to pool entries, stepping up as the pool fills. The pool is split into four equal tranches by collateral: the first pays 0.5%, then 1.0%, 1.5%, and 2.0% for the last. Early buyers pay the least; later entries pay progressively more. The fee accrues to a small seed fund deployed at graduation. See [Graduation & Complete Sets](/markets/graduation-and-complete-sets.md).

**At resolution from the pool:** winning tokens redeem their proportional share of the pool; losing tokens redeem for $0; ties refund in full. Your net payout is your share of the pool, less the 1% net-profit fee on your winnings (see [Fees](/markets/fees.md)).


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