📋 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?
How it works
- Market creation: The market is created with a list of possible outcomes.
- Trading: Users buy/sell tokens for the outcomes they believe will be correct.
- Market resolution: When the event concludes, the correct outcome is determined.
- Reward distribution: Only users holding tokens of the correct outcome receive rewards, proportional to the number of tokens they hold.
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. Participants in the market place their bets on either YES or NO and receive corresponding shares in the form of tokens.
Example market: Will ETH break 3575 USDT by 20 July 2025, 10:01 AM UTC?
- Outcome 1: YES — with initial probability set by bookmaker: X%
- Outcome 2: NO — with initial probability set by bookmaker: Y%
- Constraint: X + Y = 100%
Example market: Who will win Wimbledon 2025 championship?
- Outcome 1: Sinner — with initial probability set by bookmaker: A%
- Outcome 2: Alcaraz — with initial probability set by bookmaker: B%
- Constraint: A + B = 100%
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-Label Market
A multi-label market is a type of prediction market with at least two possible outcomes, but only one outcome will be determined as correct when the market resolves. This means participants can only win if they correctly predict the single true outcome.
Characteristics of a multi-label market
- Number of outcomes: At least 2, with no upper limit.
- Only one correct outcome: When the market closes and the event is resolved, only one outcome is selected as correct; all others are incorrect.
Example market: ETH to break 3575 USDT by 20 July 2025, 10:01am UTC time?
- Outcome 1: YES, with initial probability set by bookmaker: X%
- Outcome 2: NO, with initial probability set by bookmaker: Y%
- X + Y must be 100%
- (note: this market has 2 outcomes, hence, admin can create it as “binary” type, or “multi-label” type, and there is no problem with this)
Example market: What is the result of the match Liverpool vs. Chelsea?
- Outcome 1: Liverpool (it means Liverpool to win), with initial probability set by bookmaker: A%
- Outcome 2: Chelsea (it means Chelsea to win), with initial probability set by bookmaker: B%
- Outcome 3: Draw, with initial probability set by bookmaker: C%
- A + B + C must be 100%
Multi-Poll Market
A multi-poll market is a type of prediction or information market that allows participants to place bets on several outcomes within the same market.
Characteristics of a multi-poll market
- A market could have more than two polls. In Ruckusmarket, a multi-poll market is organized into several polls, each poll is a binary market.
- When a multi-poll market resolves, for each poll only 1 outcome is selected as the winner for settlement. These polls are technically independent.
Example market: Which companies will launch an L2 blockchain in 2025?
- Poll 1: Coinbase, has 2 outcomes
- YES, with initial probability: X1%
- NO, with initial probability: Y1%
- X1+Y1 must be 100%
- Poll 2: OKX, has 2 outcomes
- YES, with initial probability: X2%
- NO, with initial probability: Y2%
- X2+Y2 must be 100%
- Poll 3: Binance, has 2 outcomes
- YES, with initial probability: X3%
- NO, with initial probability: Y3%
- X3+Y3 must be 100%
- Poll 4: Kraken, has 2 outcomes
- YES, with initial probability: X4%
- NO, with initial probability: Y4%
- X4+Y4 must be 100%
When this market is resolved, several may happen simultaneously, such as:
- Poll 1 (Coinbase) is resolves as YES
- Poll 2 (OKX) is resolves as NO
- Poll 3 (Binance) is resolves as YES
- Poll 4 (Kraken) is resolves as NO
Example market: “Which players will score a goal in this match?
- Poll 1: Messi, has 2 outcomes
- YES, with initial probability: X1%
- NO, with initial probability: Y1%
- X1+Y1 must be 100%
- Poll 2: Ronaldo, has 2 outcomes
- YES, with initial probability: X2%
- NO, with initial probability: Y2%
- X2+Y2 must be 100%
- Poll 3: Haaland, has 2 outcomes
- YES, with initial probability: X3%
- NO, with initial probability: Y3%
- X3+Y3 must be 100%
When this market is resolved, multiple players can score, such as:
- Poll 1 (Messi) is resolved as NO
- Poll 2 (Ronaldo) is resolved as YES
- Poll 3 (Haaland) is resolved as YES
Operator Guide: Selecting the Appropriate Market Type
| Criteria | Binary Market | Multi-Label Market | Multi-Poll Market |
|---|---|---|---|
| Number of outcomes | 2 | ≥ 2 | Multiple polls — each poll is a binary market |
| When to Use | simple market, has only 2 outcomes | Single winner scenarios | multiple independent outcomes can be true at the same time. Need independent resolution logic |
| Resolution | Exactly one outcome | Exactly one outcome (mutually exclusive outcomes) | Each poll must be resolved, exactly one outcome per each poll. |
| Best For | Quick predictions, binary facts | Elections, tournaments, single-winner events | Several outcomes are not mutually exclusive and more than one can be correct. |
| Complexity (Low → High) | ⭐ | ⭐⭐ | ⭐⭐⭐ |