Every prediction market eventually needs a final answer. Resolution is the process that turns an open question into a paid-out result, and understanding it protects you from surprises.
What Resolution Means
Resolution is when a market's outcome becomes official. Once resolved, winning shares pay $1.00 each and losing shares pay $0. Before that point, prices only reflect an estimate, not a final truth.
Resolution Sources
Markets typically specify in advance what resolution source they will use, such as an official report, a scoreboard, or a named data provider. Reading this detail before you trade helps you judge how clear-cut the resolution will be.
Oracles and Dispute Windows
Many on-chain markets rely on an oracle process to report real-world outcomes, sometimes followed by a dispute window where traders can challenge a proposed result. [verify before publishing: current dispute window length and bond requirements] should be checked directly on the platform you use.
Why Ambiguity Matters
Some events are straightforward, like a final score. Others can be ambiguous, such as vaguely worded questions about future statements. Markets with unclear resolution criteria carry extra risk, since the outcome may be contested even after the event occurs.
Worked Example
A market asks whether a company will ship a product by a certain date, resolving from the company's official announcement. The company announces shipping one day late. If the market's rules define "by date" strictly, YES shares might pay $0 despite the product shipping soon after, showing why exact wording matters.
Key Takeaways
- Resolution turns an open market into a final $1.00 or $0 payout.
- Always check the named resolution source before trading.
- Oracle and dispute processes add a review step on many platforms.
- Ambiguous questions carry higher resolution risk.