> For the complete documentation index, see [llms.txt](https://docs.polarise.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.polarise.org/trading/amm-trading/how-is-pricing-determined.md).

# How Is Pricing Determined?

Another key property of LMSR is that the price of each option **pi** is the marginal derivative of the cost function.

<figure><img src="/files/ow1XafozTrw3SbgVZrpN" alt=""><figcaption></figcaption></figure>

This means pi represents the marginal cost the user must pay to buy one more unit of that option.

This implies the following:

* As more users buy shares of a particular option, its price rises gradually.
* Over time, the price approaches the market’s collective subjective probability of that outcome.
* Regardless of liquidity conditions, the cost curve is always upward sloping.\
  Buying more shares always results in increasing marginal costs.