Question 1

What happens if a prediction market is delisted before it resolves?

Accepted Answer

It depends on whether the outcome can still be established. If the market was removed after the result was effectively known — trading at or near zero or one — the terminal value is unambiguous and the position can be settled to it. If it was removed while still trading mid-range, the last traded price is not evidence of the outcome, and a position settled at that price is being paid an arbitrary amount. The correct handling is to determine the result from independent evidence where that is possible, and to leave the position open for review where it is not.

Question 2

Can a platform settle a position at its last traded price?

Accepted Answer

Not safely, for a contract that pays either zero or one. A last price of 0.40 does not mean the position was worth forty cents; it means that was the last price at which two people disagreed. The contract will still ultimately be worth zero or one, so settling at the mid price pays every holder an amount that was never a possible outcome — overpaying losers and underpaying winners.

Question 3

Why would a prediction market be removed before it resolves?

Accepted Answer

On a venue where outcomes are listed as exchange markets rather than issued as on-chain tokens, listings are under the venue’s control and can be withdrawn — because the underlying event was cancelled or voided, because the market is being migrated, or as part of a batch change such as a switch of quote asset. This is a category of event that on-chain conditional tokens do not have, since there the resolution is written on-chain rather than maintained as a listing.

One post tagged with "settlement"

What happens to your position if a market is delisted before it resolves?