What Is a 'Prediction Market' and How Does It Use Oracles? ⎊ Path

What Is a ‘Prediction Market’ and How Does It Use Oracles?

A prediction market is a decentralized platform where users trade tokens that represent the outcome of a future event (e.g. “Will BTC be over $100k by Jan 1?”).

Oracles are essential to these markets because they provide the definitive, unchangeable truth about the event’s outcome at the time of settlement. The oracle’s data submission triggers the smart contract to distribute the pooled funds to the tokens representing the correct outcome.

What Is the Risk of Using a Subjective Oracle for a Binary Option?

How Quickly Can Implied Volatility Typically Drop after a Major Event Has Passed?

What Role Do Prediction Markets Play in Decentralized Governance Models?

What Is an Example of a Real-World Event That Requires a Decentralized Oracle for a Financial Contract?

How Can an Options Trader Use a “Synthetic Short” Position to Achieve a Similar Outcome to a Double-Spend?

What Is the Concept of ‘Futarchy’ and How Does It Relate to Governance?

What Role Do Smart Contracts Play in Automating and Securing Non-Custodial Derivatives Settlement?

How Does the ‘Expiration Time’ of a Binary Option Relate to the Oracle’s Data Submission?

Glossar

Final Realized Yield

Yield ⎊ Final realized yield represents the actual return achieved on an investment or derivative position once all associated costs, premiums, and payouts have been accounted for at the conclusion of the trade.