How On-Chain Prediction Markets Work
Shares that pay 1 USDC if an outcome happens. How pricing, settlement and share splitting work on Hyperliquid's prediction markets.
The instrument
A prediction market share is a claim that pays exactly 1 USDC if a stated outcome occurs and 0 if it does not. Because the payoff is fixed, the price is a probability: a share trading at 45 cents means the market collectively prices that outcome at roughly 45%.
Yes and No
Every market has two sides that must sum to 1 USDC. If Yes trades at 45 cents, No trades at 55. Buying No is economically identical to selling Yes, which is why both are quoted: it lets you take either side without needing someone to lend you a share.
Multi-outcome markets
Some questions have more than two answers: which team wins a league, what a central bank does at its next meeting, which price bucket an asset lands in. These are built as a set of outcomes whose probabilities sum to 1. Each outcome still trades as its own Yes/No pair.
Splitting and merging
Because a complete set of outcomes is worth exactly 1 USDC by construction, you can deposit 1 USDC and mint one share of every outcome: a split. The reverse, merging a complete set back into 1 USDC, also holds. This is what keeps prices honest: if the set trades for less than 1 in aggregate, buying and merging is riskless profit, and arbitrageurs close the gap.
Settlement
When the market resolves, winning shares convert automatically to 1 USDC each in your spot balance. Losing shares go to zero. There is nothing to claim and no counterparty to chase: settlement happens on-chain.
What to actually check before trading one
Three things, in order. The resolution criteria: what precisely counts as Yes, and by when. The resolution source: who or what decides, and whether it can be delayed or disputed. And the order book depth: many of these markets are thin, and a price with almost no size behind it is not really a probability, it is a quote.
Markets are deployed permissionlessly, which means nobody has vetted the question's wording on your behalf. Read it.
Last updated 2026-09-24