How markets work
A prediction market lets you trade on the outcomes of real-world events. Instead of betting against a house, you trade against other people who have different views.Market structure
Every market has a question with a clear outcome (like “Will Bitcoin hit $100k by March 2025?”), outcome tokens (Yes and No), resolution criteria that define exactly how the outcome is determined, and an end time when resolution begins.Prices = probabilities
Prices range from 0 to 100 cents and reflect what the market thinks the probability is:- Yes at 65¢ = the market thinks there’s about a 65% chance
- Yes + No prices always add up to ~$1 (if Yes is 65¢, No is ~35¢)
The orderbook
Context uses an orderbook (not an AMM), so traders post orders at specific prices and trades happen when orders match.| Term | Meaning |
|---|---|
| Bid | Highest price someone will pay to buy |
| Ask | Lowest price someone will sell for |
| Spread | Gap between bid and ask |
How prices move
- New information — News makes an outcome more or less likely, traders adjust their orders
- Supply and demand — More buyers than sellers pushes the price up, and vice versa
- Large orders — A big buy eating through multiple price levels moves the price significantly
Market lifecycle
- Created — Market goes live with a question, criteria, and end time
- Trading — Traders buy and sell outcome tokens, prices reflect the crowd’s estimate
- End time — The Oracle begins verifying the outcome
- Resolution — Winning outcome is finalized onchain after a timelock period
- Claim — Winners redeem tokens for $1 each
Profit and loss
If you buy Yes at 40¢:- Yes wins — You get $1, profit = 60¢ per share
- No wins — You get $0, loss = 40¢ per share
Fees
- Maker fee: Low or zero (you provide liquidity with limit orders)
- Taker fee: Small percentage (you take liquidity with market orders)
- Claiming winnings: Free