# Earn by Backing the Prize Pool

**Anyone can back the prize pool and earn yield on dollars, in dollars, by taking on variance!**

Think of it like being the house, you fund the prizes and receive mathematical edge from every ticket sold. Over time, the math favors you, and the more tickets sold, the more you're likely to earn.

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## How Backing the Prize Pool Works

First a quick, high-level refresher on the Megapot protocol:

<figure><img src="https://4144610446-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0Qe5CBrrfDdDUHNLiJQ9%2Fuploads%2Fgit-blob-6dffa04e186a6e37e145035f56c3e5ed4f0bfa80%2Fwhat-is-megapot.png?alt=media" alt="What is Megapot"><figcaption></figcaption></figure>

<figure><img src="https://4144610446-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0Qe5CBrrfDdDUHNLiJQ9%2Fuploads%2Fgit-blob-cf7438175e3cfe095ac11c607196f0219f258299%2Fflywheel.png?alt=media" alt="Flywheel"><figcaption></figcaption></figure>

Now, here's how backing the prize pool works:

<figure><img src="https://4144610446-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0Qe5CBrrfDdDUHNLiJQ9%2Fuploads%2Fgit-blob-b92d67b4fed544ba39796cec6415e9372ea2debc%2Fhigh-level-new.png?alt=media" alt="High Level"><figcaption></figcaption></figure>

<figure><img src="https://4144610446-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0Qe5CBrrfDdDUHNLiJQ9%2Fuploads%2Fgit-blob-d4059303473eb5e6c298a821bc3e5256e6e7af9d%2Fmech-walkthrough-new.png?alt=media" alt="Mechanism Walkthrough"><figcaption></figcaption></figure>

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## Understanding the Return Profile

Backers have a mathematical edge, for every dollar of tickets sold, they expect to earn approximately 20 cents after prizes are paid as compensation for taking on the variance of any single drawing.

<figure><img src="https://4144610446-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0Qe5CBrrfDdDUHNLiJQ9%2Fuploads%2Fgit-blob-11e9aaecb99812ce57f48bdcb45e35787d24f3bd%2Fdrawing-outcomes.png?alt=media" alt="Drawing Outcomes"><figcaption></figcaption></figure>

Over hundreds or thousands of drawings, this edge compounds and trends toward expected returns.

<figure><img src="https://4144610446-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0Qe5CBrrfDdDUHNLiJQ9%2Fuploads%2Fgit-blob-2ddec259d6c717f1f5c93468a6b025cdacc6d327%2Fposition-growth.png?alt=media" alt="Compounding Returns"><figcaption></figcaption></figure>

Ultimately, it pays to stay in the pool over the long-term. Every outcome probability is known ahead of time and constantly working in the backer's favor.

{% hint style="info" %}
For a more technical discussion of the return profile and to run your own profit simulations check out our [Jupyter Notebook](https://colab.research.google.com/github/coordinationlabs/backer-jupyter-notebook/blob/main/LP_Risk_Return_Analysis.ipynb).
{% endhint %}

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## Next Steps

* Ready to back? Learn [How to Back the Pool](https://docs.megapot.io/getting-started/how-to-back-the-pool)
* Want to understand the full system? Read [The Ecosystem](https://docs.megapot.io/learn/the-ecosystem)
* Questions? Reach out on our [Support Chat](https://megapot.io/support)