Guides · Core explainer

What are prediction markets?

A prediction market is a place where people trade shares in the outcome of a future event. The price of those shares is, effectively, the crowd's live estimate of how likely that event is to happen.

The basic mechanic: YES and NO shares

Every market on Desipoly is a binary question with a precise resolution criterion — for example, "Will India win the 2026 T20 World Cup final?" or "Will the RBI cut the repo rate at its June 2026 MPC?"

There are two sides: YES and NO. You can buy either. Each YES share pays $1 USDC if the event happens, and $0 if it does not. NO shares are the mirror image — they pay $1 if the event does not happen.

• Prices range from 0¢ to 100¢.
• A YES and a NO share always sum to $1 — because exactly one of them will pay out.
• You can sell your shares at any time before the market closes.

Price = probability

If YES trades at 67¢, the market is saying there's roughly a 67% chance the event will happen. If you disagree and think the real odds are 80%, buying YES at 67¢ has positive expected value to you — you're paying 67¢ for something you believe is worth 80¢.

That pricing discipline is the entire point. A bookmaker sets a line and takes the other side. A prediction market has no house — the price is whatever willing buyers and sellers agree on, so it tends to converge on the best available estimate.

A worked example

Say Mumbai Indians are in the IPL final. YES on "Mumbai Indians win IPL 2026" trades at 55¢. You put $100 USDC into YES at 55¢ and receive roughly 181 shares (100 ÷ 0.55).

• If MI wins: your 181 shares each pay $1, so you get $181. Profit: $81.
• If MI loses: your shares pay $0. You lose your $100.
• If during the tournament MI's chances improve and YES rises to 70¢, you can sell at 70¢ and lock in $126.70 without waiting for the final.

How is this different from sports betting?

Fixed-odds bookmakers are the other side of your bet. They win when you lose. They embed a margin (the "vig" or "juice") into their odds — so if they think the fair probability is 50%, they'll quote you 47%.

On a prediction market, you're trading with other users. Desipoly earns a small trading fee, but it does not take the opposite side of your position. There's no incentive to nudge the line against you.

There's also a liquidity difference. You can enter and exit at any time, not just at the moment a bookmaker feels like quoting. Prices update continuously as information arrives.

How is this different from fantasy sports?

Dream11 and similar apps are daily-fantasy contests. You pick a squad, players earn points from real-world performance, and you win if your squad scores more than most others. There's no continuous price, no YES or NO position, and no secondary market to exit your position.

Fantasy sports in India are regulated as a "game of skill." Prediction markets are a different product category entirely — see prediction markets vs fantasy sports for the full comparison.

Why do prediction markets work?

Three reasons, broadly:

• Skin in the game. Unlike a poll, traders back their forecasts with money. Wrong opinions cost you.
• Information aggregation. Every trade incorporates a sliver of information — a leaked exit poll, an injury report, a budget leak. Prices aggregate these.
• Continuous update. News breaks at 2 AM; the market re-prices immediately. Traditional forecasts are snapshots.

Academic research and real-world use (the University of Iowa's election markets, corporate forecasting desks) consistently show prediction markets outperform alternatives like polls, pundits, and opinion surveys on calibration.

What makes a good market?

• Clearly defined outcome. "Will the BJP win Maharashtra 2029?" is good. "Will Maharashtra politics get interesting?" is not.
• A named, public resolution source. ECI for elections, RBI for repo rate, iplt20.com for match outcomes, Sacnilk for box office.
• A deadline. Every market closes at a specific time. After that, resolution proceeds per the criteria.

Risks you should know

• You can lose 100% of the capital you put into a single trade.
• Low-liquidity markets can have wide spreads — the price you see may not be the price you actually fill at.
• Resolution is usually unambiguous, but in rare cases the source can be delayed or contested. Desipoly uses the UMA Optimistic Oracle v3 as a dispute backstop — see how markets resolve.

Where to go next

• How Desipoly works — end-to-end trader walkthrough.
• Reading market prices — what 67¢ means, spreads, depth.
• Glossary — definitions for every term used on the platform.
• Browse live markets.