Invalid Market

A market becomes invalid when real-world events diverge from the scenario the Resolution Criteria anticipated. Common examples include a sports game that is cancelled due to weather, a scheduled government report that is delayed past the Market Expiry, or a political event whose outcome is legally contested beyond the resolution window. On Polymarket, the UMA oracle handles these cases by resolving the market at $0.50, meaning every YES and NO token redeems for half a dollar. This protects traders from being on the wrong side of a circumstance neither party could control. The Dispute Resolution process allows anyone to challenge a proposed invalid resolution if they believe a clear outcome actually exists.

An invalid market outcome is neither a win nor a loss in the traditional sense, but it does impose a real cost on traders who purchased shares above $0.50. A YES buyer at $0.80 receives only $0.50, suffering a $0.30 per-share loss. For this reason, markets covering events prone to cancellation or ambiguity carry an additional category of risk beyond ordinary directional risk. Savvy traders assess the probability of invalidity when evaluating Expected Value. Platforms attempt to minimize invalidity by writing comprehensive Resolution Criteria with explicit fallback rules, but no contract can anticipate every contingency. Understanding the invalidity risk is part of thorough due diligence before entering any Position in a prediction market.