Concepts

Market

A market is a platform where participants can make predictions about future events or facts. Participants demonstrate their confidence in their predictions by placing a certain amount of money as collateral. As time progresses, the event or fact in question will reach a definitive outcome. Participants who accurately predict the outcome are rewarded with the collaterals of those who made incorrect predictions. This incentivizes participants to carefully analyze and make informed predictions in order to maximize their chances of winning.

Some examples of market are:

• Which is the result of a football match?
• Should bitcoin price settle above 65k by the end of Sep 2024?

Binary market

When a market has exactly two outcomes, it is known as a binary market or YES/NO market. These types of markets typically revolve around YES/NO questions.

For instance, consider the market "Should the bitcoin price settle above 65k by the end of Sep 2024?". By the end of the specified time, the outcome of this market will be either YES or NO. Participants in the market place their bets on either YES or NO and receive corresponding shares in the form of tokens.

Initially, the price of each YES token (or NO token) is set at 0.5 unit of the collateral token (e.g., 1 YES token = 0.5 hVICS, where hVICS represents the collateral token of the market). As more YES or NO tokens are bought, the price of these tokens increases. In a binary market, when the price of YES goes up, the price of NO goes down so that to total of these prices are always 1.

The price adjustment is controlled by a smart contract called the Automated Market Maker (AMM) contract. The AMM contract smoothly adjusts the token prices based on mathematical conditions. For more details, please refer to the Fixed product market maker section.

When users purchase shares in a market, the collateral they provide is held by the specific market contract. The details of each market will specify the exact contract used.

Once the outcome of the market is determined, users who hold the correct tokens corresponding to the final outcome are considered winners. These winners can claim their rewards proportionally based on the number of final tokens they hold in their wallets and the total collateral contributed by all participants to the market contract for purchasing shares.

Before the closing time of a market, users could return their shares to the AMM contract and get back their collateral. This is selling shares back to the AMM contract. The selling price is also controlled by the AMM contract.

Hence there is an alternative way to earn profit from the prediction market. It is to buy shares at low price, and sell shares at high price to earn the gap.

Multi-outcome market

A market could have more than two outcomes. In Ruckusmarket, a multi-outcome market are organized into to several binary submarket.

For example, the market abouth a football match between Manchester United and Manchester City could end up in one of the following outcomes:

• Manchester United wins
• Manchester City wins
• Draw

This multi-outcome market is then formulated into 3 binary submarkets (a.k.a, polls):

• Should Manchester United win? YES/NO
• Should Manchester City win? YES/NO
• Should the match draw? YES/NO

These polls are technically indenpedent. Semantically, they are resolved based on the final outcome of the match. Only one of the above polls is resolved to YES, and the other twos should be resolved to NO.