Prediction Market
A prediction market is a trading venue where people buy and sell contracts tied to the outcome of future events.
A prediction market is a platform where users trade contracts that pay out based on whether a specific future event happens. In crypto, these markets often run on blockchains or use crypto assets, allowing participants to speculate on outcomes such as election results, sports events, economic data, protocol upgrades, or market milestones. The price of a contract usually reflects the market’s implied probability of that outcome, though prices can also be affected by liquidity, fees, and trader behavior.
Prediction markets matter because they aggregate information from many participants into a single market price, which can be useful for gauging expectations. For example, if a contract paying $1 if a proposal passes trades at $0.70, the market is roughly suggesting a 70% chance of passage. Compared with a simple poll, a prediction market asks participants to risk money or tokens, which may encourage more careful judgments. However, outcomes depend on reliable resolution rules, accurate data sources, and sufficient liquidity, so market prices should not be treated as guarantees.
Other terms in Prediction Markets
Conditional Token
A digital token whose value or payout depends on the outcome of a specific future event or condition.
Outcome Token
A digital token that represents a specific possible result in a prediction market and pays out if that result is confirmed.
Resolution Source
A resolution source is the official reference used to decide the outcome of a prediction market after the event occurs.