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:
With negative risk, that 1 No on “Other” can be converted into:
This is capital-efficient because betting against one outcome is economically equivalent to betting for all other outcomes.
Contract Addresses
Neg risk markets use different contracts than standard markets: See Contracts 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: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
- 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
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
Next Steps
Markets & Events
Understand how multi-market events are structured.
Positions & Tokens
Learn about token operations like split, merge, and redeem.