Key terms and definitions for prediction market trading.
Shares representing a prediction about an event. YES shares pay $1 if the event happens; NO shares pay $1 if it does not. Prices range from $0.01 to $0.99.
The amount of capital available in a market for trading. Higher liquidity means tighter spreads and less slippage when executing trades.
A list of all open buy and sell orders for a market, organized by price. The order book shows the depth of available liquidity at each price level.
The difference between the best available buy price (bid) and sell price (ask). A tighter spread indicates higher liquidity and lower trading costs.
The difference between the expected price and the actual execution price of a trade. Slippage occurs when there isn't enough liquidity at the desired price.
ERC-1155 tokens that represent positions in prediction markets. They are created when collateral is split into YES and NO outcomes and redeemed upon market resolution.
A system that brings real-world data on-chain to determine market outcomes. Oracles feed verified information (e.g., sports scores, price data) to smart contracts for settlement.
The process of determining and settling a market's outcome. After the event occurs, the oracle reports the result, and winning positions can be redeemed.
Costs associated with trading, including platform fees (charged on trades) and network fees (gas fees for blockchain transactions). Fee structures vary by platform.
Your current holding in a market — the number of YES or NO shares you own. Your position's value changes as the market price moves.
An entity that provides liquidity by placing both buy and sell orders. Market makers earn the spread between bid and ask prices.
The total amount of shares or currency traded in a market over a given period. Higher volume typically indicates greater interest and better liquidity.
The implied probability of an outcome, derived from the share price. A YES share at $0.75 implies a 75% probability that the event will occur.
The amount received when a market resolves in your favor. Winning shares pay $1.00 each, while losing shares pay $0.00.
A challenge to a market's resolution when participants believe the oracle's determination is incorrect. Disputes trigger a review process.