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Event Based
Event Based derivatives are ERC-20 tokens that get their value based on observable, fact-based events. These events could be a sports, an election, or really anything. As long as there is an on-chain oracle (or group of oracles) that can verify the event results, there can be a prediction market for it.
In a simple two-outcome scenario, users would put up collateral and get tokens representing the two outcomes (Team1WinsToken, Team2WinsToken). Users can then buy and sell these tokens to stock up on the side they expect to win. At the end, the oracle-defined winning tokens can be used to redeem the collateral.
Yes! The prices ratios of the Team1Wins/Team2Wins tokens can be used to estimate the probability (or at least the sentiment of what people expect) of the event going one way or another.
It's worth noting that the reliability of this is subject to the number of people involved, among other biases.
- Polymarket
- Auger
Last modified 2yr ago