Base Rate
The prior probability that a given asset rises over a given timeframe (0 to 1). On LDBD it's the baseline that Skill Rating measures each call against.
Formula
base_rate_up = (times this asset rose over the horizon) / (total historical periods) # 0..1 expected = base_rate_up if you predicted up, else (1 − base_rate_up)
A base rate is simply how often an asset has gone up over a given horizon in the past, expressed as a probability between 0 and 1. A pure coin flip would be 0.5, but real assets aren't coin flips — some drift up more often than others, so each one carries its own base rate.
It matters because scoring a prediction fairly means accounting for how easy the call was to begin with. Betting 'up' on something that usually rises is an easy call; correctly calling 'up' on an asset that rarely rises is a harder one and deserves more credit. LDBD recomputes this base rate periodically from an asset's adjusted-close price history and uses it as the expected value in Skill Rating. When an individual asset has fewer than 100 historical samples, the number is too noisy to trust, so LDBD falls back to the average base rate of its sector.
Example
If an asset's base_rate_up is 0.55 and you call 'up' and get it right, a one-month bet (K=16) earns skill_delta = 16 × (1 − 0.55) = +7.2 — and nailing 'up' on a low base-rate asset pays even more, because the expected value it beats is smaller.
How LDBD uses it
LDBD's secondary metric, the Elo-style Skill Rating, plugs the base rate straight into its expected value. In skill_delta = K × (actual − expected), an up call expects base_rate_up and a down call expects 1 − base_rate_up, so beating a direction the prior said was unlikely moves your skill score the most. Assets with fewer than 100 historical price samples borrow their sector's average to keep those early numbers from swinging wildly.
FAQ
How is the base rate set for a brand-new asset with little history?
With fewer than 100 historical price samples, a single asset's up-rate is too shaky to rely on, so LDBD substitutes the average base rate across assets in the same sector. Once the asset has built up enough of its own price history, it switches to that asset's specific base rate.