Boolmarket — prediction markets | boolmarket.xyz
The binary contract that expires at 0 or 100, why the price between them reads as an aggregated probability, and how traders with different beliefs move it.
The most common form of a prediction market is a binary option market, which will expire at the price of 0 or 100 percent. That single settlement rule is the foundation of everything you see on a market page: the price, the volume, and the expiry all describe this one outcome.
The market price of a contract can indicate what the crowd thinks the probability of the event is. A contract trading at 38 is the crowd pricing roughly a 38 percent chance that the event resolves true. The number between 0 and 100 is therefore a live, tradable probability estimate.
On narrow screens, swipe or scroll the plate sideways.
Traders with different beliefs trade contracts whose payoffs relate to the unknown future outcome, and it is this disagreement that moves the price. A trader who believes the true odds are 70 will buy from a trader who believes they are 50, and the price ticks upward as a result.
The economic theory behind prediction markets is the efficient market hypothesis: prices aggregate the information that participants bring. The concept is championed in James Surowiecki's 2004 book The Wisdom of Crowds and Cass Sunstein's 2006 Infotopia.
At expiry the contract settles fully. If the event resolves true, holders receive the 100 percent payout; if it resolves false, holders receive 0. Between purchase and settlement the price can be sold at any time, so the 0-or-100 rule only binds those who hold to expiry.
Further reading