mech-v0.1.2: https://ggresear.ch/t/conditional-funding-markets/27
We suggest here a simplified design of Conditional Funding Markets (CFMs) under some simplifying assumptions.
Projects can be selected based on the Funded conditional only. This entails that the NotFunded conditional should be known. This fits well to cases where:
Flat CFMs take advantage of these assumptions to use a single set of conditional outcomes $(\text{Project A is Funded}, \text{Project B is Funded}, … )$, where the traditional CFM design uses a pair of $(\text{Funded}, \text{Not Funded})$ outcomes for each project.
With $n$ the number of projects which get selected for funding:
This setup also simplifies liquidity provision and concentrates it, thus making the markets more efficient and less prone to manipulation.
As shown in the diagram above, each $1 of collateral is utilized in all of the sub-markets, whereas in the original design, we would require $1 of collateral for each project's $(\text{Funded}, \text{Not Funded})$ pair.
In a set of $N$ projects, if a set of $M ≤N$ projects are selected in a given round, the Flat CFM design fragments liquidity in $M$ parts, where CFM was splitting it in $N$ parts.