Negative risk is a mechanism for multi-outcome events where only one outcome can win. It enables capital-efficient trading by allowing positions across all outcomes within an event to be related through a conversion operation.
How It Works
In a standard multi-outcome event, each market is independent. If you want to bet against one outcome, you must buy that outcome’s No tokens—but those No tokens have no relationship to the other outcomes.
Negative risk changes this. In a neg risk event:
- A No share in any market can be converted into 1 Yes share in every other market
- This conversion happens through the Neg Risk Adapter contract
Example
Consider an event: “Who will win the 2024 Presidential Election?” with three outcomes:
| Outcome | Your Position |
|---|
| Trump | — |
| Harris | — |
| Other | 1 No |
| Outcome | After Conversion |
|---|
| Trump | 1 Yes |
| Harris | 1 Yes |
| Other | — |
Identifying Neg Risk Markets
The Gamma API includes a negRisk boolean on events and markets:
{
"id": "123",
"title": "Who will win the 2024 Presidential Election?",
"negRisk": true,
"markets": [...]
}
const response = await client.createAndPostOrder(
{
tokenID: "TOKEN_ID",
price: 0.5,
size: 100,
side: Side.BUY,
},
{
tickSize: "0.01",
negRisk: true, // Required for neg risk markets
},
);
Contract Addresses
Neg risk markets use different contracts than standard markets:
See Contract Addresses for the Neg Risk Adapter and Neg Risk CTF Exchange addresses.
Augmented Negative Risk
Standard negative risk requires the complete set of outcomes to be known at market creation. But sometimes new outcomes emerge after trading begins (e.g., a new candidate enters a race).
Augmented negative risk solves this with:
| Outcome Type | Description |
|---|
| Named outcomes | Known outcomes (e.g., “Trump”, “Harris”) |
| Placeholder outcomes | Reserved slots that can be clarified later (e.g., “Person A”) |
| Explicit Other | Catches any outcome not explicitly named |
How Placeholders Work
- Event launches with named outcomes + placeholders + “Other”
- When a new outcome emerges, a placeholder is clarified via the bulletin board
- The “Other” definition narrows as placeholders are assigned
Trading Rules for Augmented Neg Risk
Only trade on named outcomes. Placeholder outcomes should be ignored until
they are named or until resolution occurs. The Polymarket UI does not display
unnamed outcomes.
- If the correct outcome at resolution is not named, the market resolves to “Other”
- The “Other” outcome’s definition changes as placeholders are clarified—avoid trading it directly
Identifying Augmented Neg Risk
An event is augmented neg risk when both flags are true:
{
"enableNegRisk": true,
"negRiskAugmented": true
}
The Gamma API includes a boolean field negRisk on events and markets, which indicates whether the event uses negative risk. For augmented neg risk events, an additional enableNegRisk field is also true. When placing orders, the SDK option is always negRisk: true / neg_risk: True regardless of whether the market is standard or augmented neg risk.
Technical Details
Conversion Mechanics
The conversion operation is atomic and happens through the Neg Risk Adapter:
- You hold 1 No token for Outcome A
- Call the convert function on the adapter
- You receive 1 Yes token for every other outcome in the event
Resources
Next Steps
