What is a prediction market?

A prediction market is a marketplace where the thing being bought and sold is a contract that pays $1 if some specific event happens and $0 if it doesn't. People trade these contracts against each other in real time, just like stocks. The current trading price — say, 47 cents — is the market's collective guess at the probability of the event. Buy at 47¢, and you get $1 back if you're right (a 113% return) or $0 if you're wrong.

Why prices are probabilities

If a contract that pays $1 on Yes is trading at 47¢, it means enough people, weighted by the dollars they're willing to bet, think the event has roughly a 47% chance. Some think more, some think less; the price is where supply meets demand. The cleaner the market — lots of traders, low fees, real money — the more reliably the price tracks the true probability.

Why these markets work

Polls ask people what they want or what they say. Markets ask people to put money behind what they actually believe. Skin in the game makes opinions sharper. Across a wide range of historical examples — elections, sports, weather, science — prediction markets have matched or beaten the best polls and pundits.

What happens at the end

When the event is over and the answer is clear, the market resolves. Holders of the winning side ("Yes" if it happened, "No" if it didn't) redeem their shares for $1 each in USDC. Holders of the losing side get nothing. That's it.