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Glossary/Resolution & Settlement

Resolution & Settlement Glossary

How markets are decided, who decides them, and how winners get paid

10 terms

D1 term

Dispute Resolution

Dispute resolution is the process by which a prediction market platform adjudicates a challenge to a proposed outcome, ultimately determining the correct settlement for contested markets.

I1 term

An invalid market is a prediction market that cannot be resolved to a clear YES or NO outcome because the underlying event was cancelled, postponed indefinitely, or the result is genuinely ambiguous under the stated resolution criteria.

M2 terms

Market expiry is the date and time at which a prediction market closes to new trading and becomes eligible for resolution based on the outcome of the underlying event.

Market Resolution

Market resolution is the process by which a prediction market determines its official outcome after the underlying event concludes, triggering the final settlement of all open positions.

O1 term

An oracle is a system that brings verified real-world data on-chain so that smart contracts can determine outcomes and execute settlements without relying on a single trusted party.

P1 term

A payout is the amount a trader receives per contract upon settlement, typically $1 per winning share and $0 per losing share on binary prediction markets.

R2 terms

Resolution Criteria

Resolution criteria are the precise rules written into a prediction market contract that define exactly what outcome must occur, what source will confirm it, and how edge cases will be handled.

Resolution Source

A resolution source is the designated external authority or data feed whose published output determines the official outcome of a prediction market contract.

S1 term

Settlement is the financial process that follows market resolution, in which winning positions are credited their full payout value and losing positions expire worthless.

U1 term

UMA Optimistic Oracle

The UMA Optimistic Oracle is a decentralized truth-reporting system used by Polymarket that resolves prediction markets by assuming proposed outcomes are correct unless challenged within a 2-hour window.