An information market is where people buy and sell shares on how a future event will resolve. Prices change in response to trading activity. You can buy, trade, or sell shares in future outcomes.
The prices of shares in each market reflect the probabilities of the outcomes. Shares are valued between $0.00 and $1.00 and prices change depending on traders’ collective beliefs on the likelihood of the market resolving in either direction. For instance, if the price for a “Yes” share is $0.75, then the market believes the probability that the event will occur is 75%.
There are 3 types of markets that currently exist:
- Binary - A market with two options that will resolve either $1 or $0. (ex: Will Tetranode have over 100k Twitter followers by 12/31/2025? YES/NO)
- Categorical - A market with multiple options that will resolve either $1 or $0. (ex: What ice cream will have the most sales in 2025? Chocolate/Vanilla/Strawberry/Other)
- Scalar - A market that resolves to where the final value sits between a lower and upper bound.
- What will the population of Spain be in their upcoming census (47M-55M)? Long/Short)
- If the population is 50M, the outcomes will resolve to: Long = $0.375 & Short = $0.625