Prediction markets turn questions about the real world into tradeable contracts. Here is how YES/NO shares price, how they settle, and how on-chain markets differ from Polymarket and Kalshi.
A prediction market lets you trade a contract that pays out based on whether a real-world event happens. You are not betting on where a stock drifts or where a perp settles. You are answering a question that has a definite yes or no: does this candidate win, does BTC close above $100k on a set date, does the central bank hike at the next meeting? When the answer comes in, the contract is worth its full value or nothing.
The instrument behind all of it is the binary outcome share. Each one represents a single side of a yes-or-no question and trades somewhere between $0 and $1. Win, and the share redeems for $1. Lose, and it goes to zero. The current price is the part that matters most: it is the market’s live read on probability. A YES share at $0.60 means the crowd is pricing roughly a 60% chance the event happens. Watch that number move and you are watching sentiment update in real time.
Every market runs through the same three stages: it gets created, it trades, and it resolves.
Not every market is a clean yes or no. Plenty are multi-outcome: which of five candidates takes the primary, for instance. Each candidate gets its own share price, and the prices across all of them sum to $1.00 because exactly one will end up true. Read those buckets like a probability distribution rather than a single bet.
Nobody sets the odds. Supply and demand do, exactly like any order book. More buyers think an event lands, YES demand climbs, the price climbs with it. A poll drops, a headline breaks, a whale dumps a position, and the quote reprices on the spot. The number you see is the market arguing with itself in public.
The useful part: a YES price reads straight off as an implied probability. Here is what that looks like in practice.
A 25% read. Put in $100 and a win pays back $400. Big upside, but the market thinks you are probably wrong.
A coin flip. YES and NO carry the same expected value here, so the price tells you the crowd genuinely cannot call it.
An 80% read. The crowd is confident, so $100 only returns $125 on a win. You are paying up for a likely outcome.
Arbitrageurs keep the whole thing honest. When the same event prints different odds on two venues, someone buys the cheap side, sells the rich side, and pockets the spread for almost no risk. That trade also drags the two prices back together, which is why identical markets rarely stay far apart for long.
Liquidity decides how much you should trust the price. Deep books with tight spreads give you a real signal. A market with three open orders gives you noise dressed up as a probability. The big contracts — presidential races, rate decisions, headline crypto milestones — are the most reliable precisely because so much capital is fighting over the right number.
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The category you trade tells you how hard it will be to win. Some markets reward research; others reward being plugged into the right corner of the internet. Know which game you are playing before you size up.
The flagship category and the deepest by volume. Election winners, legislative votes, policy calls. Prices jump on polls, debate nights, and breaking news, which makes them fast and unforgiving.
Will BTC clear a price by a date, will ETH print a new high, will a token launch on schedule. If you already live in crypto, this is where your information edge is largest.
Rate decisions, GDP, inflation prints, earnings surprises. The home turf of traders who came from traditional finance and can read a macro calendar.
Game results, award winners, championship brackets. Where most people start, because you do not need a finance degree to have an opinion on a final.
Will an AI model clear a benchmark, will a rocket launch on time, will a product ship before its deadline. Still niche, but the crypto and AI crowds are pushing real volume into it.
Governance votes, upgrades, token unlocks, DeFi milestones. These belong to on-chain markets, where the event and the settlement both live on the same chain and can be verified directly.
Where a market runs decides who holds your money, how payouts clear, what you can verify, and whether you are even allowed to trade. That is the line between off-chain and on-chain, and it matters more than the markets themselves.
An off-chain venue works like a brokerage. The company holds your funds, matches orders on its own systems, and pays out through an internal settlement process. Kalshi is the cleanest version: a CFTC-regulated designated contract market in the US. You wire dollars in, trade event contracts, and Kalshi clears everything. Clean legal status for Americans, with the usual price of admission — full KYC and trusting the operator to hold your cash and call the result.
Polymarket sits in a stranger spot. Markets are created and settled in USDC on-chain, but the trading itself runs through an off-chain central limit order book on Polygon, the CTF/CLOB design it is known for, because matching orders that way is faster. Crypto rails underneath, off-chain matching on top. And despite all the crypto plumbing, it still geoblocks US users while the commodity-law questions stay unsettled.
On-chain markets put the whole stack on the blockchain: order matching, collateral, and settlement all happen in the open. Hyperliquid does this through HIP-4, an extension to the protocol that lets event contracts be created and traded natively on its L1 without a gatekeeper deciding what gets listed.
It also flips who gets to list markets. Instead of waiting for an operator to bless a question, the design lets participants spin up their own outcome markets. That is how the menu of tradeable events gets long enough to cover the niche stuff nobody at a centralized desk would bother listing.
If you already use crypto, the on-chain path is short. The off-chain route means an account and KYC; the on-chain route means a wallet and some stablecoins. Here is the crypto-native version.
It all reduces to one thing: find prices that disagree with reality and take the other side. Four habits get you there.
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Risk Warning: Trading perpetual futures involves significant risk of loss. Only trade with capital you can afford to lose. Dexly is a non-custodial interface; you are responsible for your own funds and trading decisions.
Trade prediction markets on Dexly
