Prediction Market Glossary

A binary market has two mutually exclusive sides, usually Yes and No. Learn how prices, order books, fixed payouts, and risk work.

An event contract has a payout tied to a defined outcome. Learn how questions, expiry, resolution rules, prices, and fixed settlement values work.

A multi-outcome prediction market groups several possible results. Learn how outcome books, fallback choices, prices, and settlement work.

Payouts in prediction markets are the amounts distributed to winning shareholders when a market resolves. Winning shares pay $1, losers pay $0.

A prediction market lets traders buy and sell outcome shares. Prices act as probability signals shaped by information, liquidity, spread, and risk.

Resolution is the process of determining the outcome of a prediction market and distributing payouts to holders of winning shares.

Implied probability is the likelihood of an event as estimated by the market price of a prediction market share. A $0.70 share implies a 70% probability.

A limit order lets you specify the exact price at which you want to buy or sell prediction market shares. Your order only fills at your price or better.

Prediction-market liquidity measures how much can trade near the current price. Evaluate spread, depth, effective price, recent fills, and exit capacity.

A market maker is a trader or firm that provides liquidity by continuously placing buy and sell orders, profiting from the bid-ask spread.

An order book is a list of all open buy and sell orders for a prediction market. It shows available prices and quantities, enabling transparent price discovery.

Shares (or outcome tokens) are the tradeable units in prediction markets. Each share pays $1 if the associated outcome occurs, $0 if it doesn't.

Slippage is the gap between an expected price and the average execution price when an order crosses limited order-book depth.

The spread is the difference between the highest buy price (bid) and lowest sell price (ask) in a prediction market. Tighter spreads mean lower trading costs.

An Automated Market Maker (AMM) is an algorithm that provides liquidity and sets prices using a mathematical formula instead of a traditional order book.

On-chain means transactions or state changes are recorded by a blockchain. Learn what this does—and does not—prove for prediction markets.

An oracle is a service that provides real-world data to smart contracts, enabling prediction markets to determine outcomes and settle automatically.

A smart contract is self-executing code on a blockchain that automatically enforces rules and settles prediction markets without intermediaries.

HIP-4 is Hyperliquid's outcome-trading primitive for binary, multi-outcome, recurring price, and price-bucket prediction markets.

Hyperliquid is the Layer 1 network behind HyperCore, HyperEVM, and HIP-4 outcome markets. Learn how Purrdict uses its order-book infrastructure.

Arbitrage in prediction markets means exploiting price discrepancies between outcomes or platforms to lock in a guaranteed profit regardless of the result.

Edge is the difference between the true probability of an event and the market's implied probability. Traders with edge consistently profit over time.

Expected value (EV) is the average outcome of a trade if repeated many times. Positive EV trades are the foundation of profitable prediction market trading.