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Prediction markets

A prediction market is the canonical consumer of an optimistic oracle. Users speculate on future events by trading binary outcome shares; the oracle decides which side wins. OMY is purpose-built for this use case, and the reference Market contract in the repo is the first real consumer we ship.

What a prediction market needs​

Three things, in order:

  1. A way to mint outcome shares. Users deposit USDT; the market mints 1 YES + 1 NO share per USDT. At resolution, only one side is worth $1; the other is $0.
  2. A way to trade those shares. Usually a constant-product AMM. Some users want to buy YES, some want to sell. The AMM lets them transact without finding a counterparty directly.
  3. A way to settle. Once the underlying event resolves, the market needs a trustworthy answer. That's where OMY comes in.

How the oracle plugs in​

 ┌─────────────────────┐
 Market.RequestResolution ──► OracleFactory │
 (creator-gated) │ deploy + bind │
 └──────────┬──────────┘
 ▼
 ┌─────────────────────┐
 │ Assertion │
 │ ── liveness ── │
 └──────────┬──────────┘
 │ OracleResult
 ▼
 ┌─────────────────────┐
 │ Market │
 │ settle YES/NO │
 │ 1% silent skim │
 └─────────────────────┘
 │ Redeem
 ▼
 Winners get
 $0.99 / share

The Market sizes its oracle bond proportional to TVL — the more value at risk, the more economic security demanded from the oracle. Default: 2% of total collateral, floored at the configured minimum and capped at 10 000 USDT.

Design considerations​

Liveness window​

The liveness window is the gap between propose and finalize. Long enough that disputer-watchers have time to react; short enough that users get fast settlement.

Event typeSuggested liveness
Crypto price thresholds (verifiable from chain)30 min – 1 h
Sports / scheduled events2 – 6 h
Elections / multi-source verification12 – 24 h
Subjective or contentious24 h+

The trade-off: short liveness = poor user experience for disputers; long liveness = poor user experience for traders waiting to redeem.

Question phrasing​

The oracle is only as good as the question. "Did event X happen?" must be unambiguous to anyone reading the question text. The single biggest cause of prediction-market controversy is poorly-worded questions where reasonable people disagree about what counts as the answer.

Always include:

  • A specific date / time with a timezone
  • A verifiable source ("according to the official scoreboard at example.com")
  • A fallback rule ("if no event by date X, resolves NO")

See Question templates for the full guide.

LP economics​

In a binary prediction market, the LP takes directional impermanent loss: if they seed equal YES and NO and the market resolves YES, the LP's NO shares go to zero. The expected return depends on:

  • Swap fees collected over the lifetime of the market
  • The variance of the final outcome (more uncertain = better LP returns)
  • Whether the LP can hedge by participating on the contrarian side

The reference Market's swap fee is 0.5% (Phase A: all to treasury; Phase B: configurable split between LP and stakers). LP rewards via $OMY emissions are planned for Phase B if retail LP shows up.

Resolution skim​

The Market takes a 1% silent resolution skim to treasury when the oracle finalizes. Users see clean payout numbers — every winning share pays $0.99 instead of $1.00. This funds the protocol without nickel-and-diming users on every trade.

Worked example​

Question: Will the BTC/USDT spot price (Binance) close above $200,000 at 00:00 UTC on 2026-12-31?

StepWhat happens
Creator deploys MarketSets question, bond floor 100 USDT, liveness 6 h
LP seedsDeposits 10 000 USDT → 10 000 YES + 10 000 NO into pool
Users tradeThroughout the year, users buy YES (price rises to 0.42), buy NO (price falls to 0.58)
2026-12-31 00:00 UTCEvent occurs (real-world price check)
Creator calls RequestResolutionMarket sends CreateAssertion to factory with bond = max(2% × TVL, 100)
Proposer asserts answerPosts bond + 2 USDT fee; says YES (or NO)
Liveness window opens6 hours for anyone to dispute
Common case: no disputeAfter 6h, finalize() is called — answer accepted as truth
OracleResult → MarketMarket enters Resolved, skims 1% to treasury, sets winningYes = true
Users redeemYES shareholders get $0.99 per share; NO shares worth $0

If a dispute occurs, the resolver (committee or DVM) settles it. Loser bond splits 50/50 between winner and treasury.

Integration checklist for builders​

import {DocFeatures, DocFeature} from '@site/src/components/docs/DocFeatures';

Don't ship a flat bond. Scale it. Lying must cost more than profit from steering. Crypto facts → short. Subjective facts → long. Mismatch causes controversy. Date + timezone + source + fallback rule. Write it before launch. Status guard + sender check + storage flag. See Patterns. Stamp deadline, expose CancelAwaiting. Don't let users lock funds on a dead factory hop. Users should see 0.99 payouts and understand why. Hide it in UI? At least document it in FAQ.

Further reading​