What are prediction markets?
Prediction markets are those that come to an end when the outcome is determined. This can include political elections, sports, financial markets, and more.
As an example, the TRUMPWIN-USD market tracks the odds of Donald Trump winning the 2024 U.S. Presidential Election. Once the election is completed, the TRUMPWIN-USD market will wind down and final settle to the oracle price (either $1 or $0.001). The process to final settle will be determined by a governance vote, and thus will not be automatic.
How does the oracle price work?
The oracle price for prediction markets represent the price of that market on Polymarket. Funding rates are calculated based on the oracle price and function the same way across all dYdX markets.
What does the price mean?
The price represents the odds that the market-outcome will occur.
How are prediction markets settled?
When the market-outcome occurs, the market settles to $1. When it doesn’t the market settles to $0.001.
Anything else I should know?
Any time a market’s price changes extremely quickly, there is the increasing chance that some accounts cannot be liquidated in time. As a prediction market comes to conclusion, the price can be extremely volatile. As such, it possible that your account can be de-levered against an account that is underwater. In other words, your position may be forcefully closed or reduced prior to the event being final-settled.
To read more about how dYdX Chain handles deleveraging, head here.
Disclaimer and Terms
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