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Prediction markets let people trade contracts whose payout depends on the outcome of a real-world event. The price of a contract reflects the crowd’s collective estimate of how likely that outcome is. This page covers the intuition; for the precise mechanics on Calibri, see Core Concepts.

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Contracts and price

Every Calibri market is binary: it resolves to YES or NO. There are two contracts per market:
  • A YES contract pays 1.00 USDC if the outcome is YES, and 0 if NO.
  • A NO contract pays 1.00 USDC if the outcome is NO, and 0 if YES.
A contract’s price is always between 0.01 and 0.99 and reads directly as a probability. Because YES and NO are the two halves of the same question, their prices always sum to 1.00 — if YES is 0.60, NO is 0.40. You take a view by buying the side you believe in. Buying YES profits if the event happens; buying NO profits if it doesn’t. (Buying NO at 0.40 is the mirror image of YES at 0.60 — the two sides price the same question.)

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A worked example

Suppose a market asks “Will Candidate X win the election?” and YES is trading at 0.58 — the market thinks there’s a ~58% chance. If you think the market is underestimating X’s chances:
  • You buy 100 YES contracts at 0.58, costing 58.00 USDC.
  • If X wins, each contract pays 1.00 USDC → you receive 100.00 USDC.
  • Your profit is 42.00 USDC.
If you think the market is overestimating X:
  • You buy 100 NO contracts at 0.42, costing 42.00 USDC.
  • If X loses, each NO contract pays 1.00 USDC → you receive 100.00 USDC.
  • Your profit is 58.00 USDC.
If the outcome goes against you, the losing contracts pay 0 and your loss is limited to what you paid. Your maximum loss on any position is known upfront: the cost of the contracts.

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Why prices move

Prices change as new information arrives and as traders update their views. Say a market prices a company’s earnings beat at 0.60. If the company then reports strong results, buyers push the YES price up toward 0.75 — later buyers pay more for the same contract than you did. That is what the price is telling you: buying a side you think is underpriced is how you profit. Get in at 0.60 on something that resolves YES and each share pays 1.00; the cheaper you bought, the more you made.
You don’t have to wait for resolution. You can sell your contracts to another trader at the price the market will pay now — see Placing orders.

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What keeps prices honest

Prediction-market prices tend to track true probabilities because of a few forces:
  • Real stakes. People with money on the line tend to price more carefully than people answering a poll.
  • The YES + NO = 1.00 identity. If the two sides ever drift away from summing to 1.00, the mismatch is an opportunity that traders quickly close — pulling prices back into line.
  • Continuous updating. Prices adjust the moment new information appears, rather than waiting for a scheduled forecast.
The result is a live, market-implied probability for each event that updates in real time.

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Settlement

When a market resolves, each contract pays out automatically:
The winner collects the full pot — their own stake plus the loser’s. There is no fee at settlement or redemption; your only trading cost is the taker fee at the moment your order fills (see Fees). Winners redeem their payout on-chain themselves. If a market can’t be resolved fairly it is voided: every share pays 0.50, YES and NO alike, and the taker fee is returned. That is not a refund of what you paid — see Voids and postponements. For how markets resolve on-chain — including the escalation ladder and the deadman fallback — see Market resolution.

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Next steps

Core concepts

Binary markets, the combined order book, contracts, and lifecycle.

Placing orders

How to actually place an order and read your position.

Fees

The single taker fee and how it’s computed.

Getting started

Open an account, fund it, and place your first trade.