What Is Market Resolution? How Prediction Markets Settle
Resolution is the process of determining the outcome of a prediction market and distributing payouts to holders of winning shares.
Definition
Resolution (or settlement) is the final step in a prediction market’s lifecycle. When the real-world event occurs and its outcome is known, the market resolves: winning shares pay $1, losing shares pay $0, and all positions close.
How Resolution Works
- Event occurs — e.g., BTC closes above $95k, or the election results are certified.
- Outcome is determined — an oracle, committee, or automated data feed confirms what happened.
- Shares settle — winning outcome tokens pay $1 each. All other outcomes pay $0.
- Funds distribute — winners receive their payouts automatically.
Resolution Methods
- Automated — price feeds or on-chain data trigger resolution without human intervention. Crypto price markets typically use this.
- Oracle-based — a trusted data source (like UMA, Chainlink, or a designated reporter) submits the outcome.
- Committee — a group of designated resolvers votes on the outcome. Used for subjective or ambiguous events.
Why Fast Resolution Matters
Slow resolution locks up capital. On Purrdict, markets built on HIP-4 settle instantly when the outcome is confirmed — no claim process, no waiting period, no gas fees.
Disputed Resolutions
Some platforms include a dispute period where participants can challenge the reported outcome. This adds a safety layer for controversial or ambiguous events, though it also delays payouts.