Documentation Index
Fetch the complete documentation index at: https://docs.outcome.xyz/llms.txt
Use this file to discover all available pages before exploring further.
This page explains the mechanics behind outcome tokens: where they come from, why their prices always sum to C100 (which equals 1 USDH), and what those prices represent.
Outcome tokens
Every market on Outcome is made up of outcome tokens, one per possible outcome. In a binary market, that’s two tokens (YES and NO, or UP and DOWN). In a multi-outcome market, it’s one token per possibility.
Each token has a single defining property: it pays 1 USDH at settlement if its outcome resolves, and 0 otherwise. That’s the entire payoff structure. The price you pay for the token before settlement is what determines your gain or loss.
Minting and burning
The reason a complete set of outcome tokens always sums to 1 USDH is a process called minting and burning.
Minting. Anyone can deposit 1 USDH to the protocol and receive a complete set of outcome tokens in exchange. For a binary market, that’s one YES and one NO. For a multi-outcome market, it’s one token for each possible outcome. Because exactly one of those tokens will pay 1 USDH at settlement, the complete set is always worth 1 USDH.
Burning. Anyone holding a complete set of outcome tokens can return them to the protocol and receive 1 USDH in exchange. This is the reverse of minting.
Most users never mint or burn directly. They buy and sell individual tokens on the order book. But minting and burning are what guarantee that a complete set is always worth 1 USDH, regardless of how the individual tokens are trading. If any single token gets too cheap or too expensive relative to the others, traders can mint or burn to capture the arbitrage, which keeps the prices coherent.
Why prices sum to 1
Because a complete set always burns back to 1 USDH, the prices of the tokens in a market always sum to approximately C100. Otherwise, arbitrage would be available.
For a binary market: YES + NO ≈ C100 at any time.
For a multi-outcome market: the sum of all outcome prices ≈ C100 at any time.
The word “approximately” matters. In practice, prices sum to slightly less than C100 because of the spread (there’s always a gap between the best bid and best ask on each side). But the bound is tight enough that the probability interpretation works.
Prices as probabilities
Because the prices sum to approximately C100, each price can be read as the market’s implied probability for that specific outcome.
A YES at C40 means the market is collectively pricing the event at 40% likely. A NO at C60 means the market is pricing the event at 60% likely not to happen. They sum to C100, which corresponds to 100% probability that something happens.
In a multi-outcome market, the same applies. If candidate A trades at C50, candidate B at C30, and candidate C at C20, the market is pricing A at 50% likely, B at 30%, and C at 20%. The three sum to 100%.
This is what makes prediction markets useful as a forecasting tool, even for people who don’t trade. The prices aggregate the views of everyone buying and selling, producing a probability estimate based on collective belief and money at stake.
