What Are Shares in Prediction Markets? How Outcome Tokens Work
Shares (or outcome tokens) are the tradeable units in prediction markets. Each share pays $1 if the associated outcome occurs, $0 if it doesn't.
Definition
In prediction markets, shares (also called outcome tokens) represent a position on a specific outcome. Each share pays out a fixed amount — typically $1 — if the predicted outcome occurs, and $0 if it does not.
How Shares Work
When you buy shares in a prediction market, you are expressing a view on the likelihood of an event. The share price reflects the market’s consensus probability.
- Buy at $0.30 — you think the event is more likely than 30%. If you’re right, each share pays $1, netting you $0.70 profit.
- Sell at $0.80 — you think the event is less likely than 80%. Selling shares you hold locks in your profit without waiting for resolution.
Shares vs. Traditional Assets
Unlike stocks, prediction market shares have a defined expiration and payout. They always settle to either $0 or $1 (in binary markets), making risk calculation straightforward.
| Feature | Prediction Market Shares | Stocks |
|---|---|---|
| Payout | $0 or $1 (binary) | Variable |
| Expiration | At event resolution | None |
| Max loss | Purchase price | Entire investment |
| Price meaning | Probability estimate | Company valuation |
On-Chain Shares
On Purrdict, shares are on-chain tokens on Hyperliquid. They can be bought, sold, and settled transparently without any intermediary.