How Prediction Markets Work

How Prediction Markets Work

Prediction markets let people bet on future outcomes. The crowd's collective bets create a probability estimate.

Basic Concept

Think of it like a stock market for events:

• Each market is a YES/NO question

• People buy YES or NO shares with SOL

• Share prices reflect probability

• Winners get payouts after resolution

Example

Market: "Will BONK reach $0.0001 before March 2026?"

Starting State:

• 100 SOL in YES pool

• 100 SOL in NO pool

• Odds: 50% YES / 50% NO

You bet 50 SOL on YES:

• YES pool becomes 150 SOL

• NO pool stays 100 SOL

• New odds: 60% YES / 40% NO

Your bet moved the market. This is how AMMs work - supply and demand determine prices.

Odds Calculation

Oracle Degen uses a simple formula:

YES odds = YES Pool / Total Pool NO odds = NO Pool / Total Pool

As more people bet one side, those odds decrease (becomes less profitable) while the other side increases (becomes more attractive).

Payout Example

You bet 1 SOL on YES at 2.0x odds.

If YES wins:

• Gross payout: 2.0 SOL

• Platform fee (3%): 0.06 SOL

• Net payout: 1.94 SOL

• Your profit: 0.94 SOL

If NO wins:

• You lose your 1 SOL bet

• NO holders get paid proportionally