Explainers

How do prediction markets decide the winning outcome?

The market's written criteria and named data source determine settlement. Check timing, oracle rules and dispute handling separately from the displayed price.

Updated

Turn the question into a test

Polymarket's resolution guide says each market specifies the evidence source, eligible resolution date and treatment of edge cases. The short title is only a starting point.

Try rewriting the rule as one sentence: 'This market resolves Yes if [condition], measured by [source], at [time].' If a blank cannot be filled from the rules, the contract is not yet clear enough to compare with another market.

Identify the price measurement

Limitless describes several resolution methods. Its short-cadence Chainlink TWAP markets compare averaged prices, with the feed and averaging window named in the individual market description. Other markets can use different sources.

A candlestick from your preferred exchange is therefore not automatically relevant evidence. Save the named feed, window, tolerance and equality rule for the exact market you are reading.

Separate the three clocks

A trading deadline, an announced outcome and a redeemable payout are separate milestones. Polymarket documents a two-hour challenge period after a proposal, with escalation when outcomes are disputed. Limitless notes that its API may show resolution before the onchain payout is ready.

An event deadline therefore tells you when the event ends, not necessarily when you can redeem or withdraw.

When a price spike does not count

Imagine a hypothetical market that resolves Up only if its closing one-minute average reaches $100. A last-second trade prints $101, but the closing average is $99.90. Under that invented rule, the spike does not establish an Up result.

This illustrates why the measurement method matters. It is not a description of a currently listed contract; check the actual market's feed and comparison operator.

Check the remedy as well as the winner

Limitless's refund policy says holders on the side that should have won receive their purchase cost when a market is misresolved, rather than the potential winning payout. This differs from ordinary redemption.

Save the market rules and transaction record together. If an outcome appears wrong, compare the stated remedy with your position before assuming that a correction will reproduce the result you expected.

Projects in this article

PolymarketLimitless

Sources & further reading

Sources consulted . Rules and documentation can change.

01Polymarket: Resolution02Limitless: Market Resolution03Polymarket: Chainlink TWAP Prices04Limitless: Refund Policy
Editorial approachHow we use AI