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Prediction markets 101
If you have never used one before, start here.
- Version
- 1.0
- Effective
- 2026-09-06
- Last updated
- 2026-09-06
What is a prediction market?
A prediction market lets people trade contracts that pay out based on a real-world event. Because traders lose money when they are wrong, prices tend to concentrate the information available.
#whatPrices as probabilities
A contract paying $1.00 if an event happens will trade near what participants collectively think the chance is. At $0.20 the market implies about 20%. YES and NO prices sum to roughly $1.00.
A market-implied probability is a snapshot of opinion weighted by money. It is not a forecast issued by this platform, and it is often wrong.
#probabilityBinary questions only
Every market here has two outcomes. Multi-outcome questions are expressed as several separate binary markets.
#binaryWhy on chain?
- Collateral sits in public contracts, not with a company.
- Anyone can create a market without asking permission.
- Every trade, fee and resolution is publicly verifiable.
- Payouts are executed by code, not by a support ticket.
What prediction markets are not
- Not advice, and not a signal to follow blindly.
- Not a savings product: positions can go to zero.
- Not reliable when liquidity is thin or the question is poorly written.