Prediction Market Glossary: 30+ Terms Every Trader Should Know
Prediction markets blend finance, crypto, and legal jargon. Here's a no-nonsense glossary of every term you'll see.
If you're new to prediction markets, the vocabulary can be a barrier — every market borrows terminology from securities trading, crypto, and regulatory law. This glossary covers everything you'll see.
Trading terms
Binary contract: A contract that pays $1 if an event happens and $0 if it doesn't. Order book: The list of buy and sell orders for a market. Spread: The difference between the best bid and ask. Slippage: The price movement that happens between when you click and when your order fills. Market maker: A trader (or algorithm) that posts both bids and asks to provide liquidity.
Crypto terms
USDC: A US-dollar-pegged stablecoin issued by Circle, used as the unit of account on Polymarket. Gas: The fee paid in the chain's native token (MATIC on Polygon) to process a transaction. Wallet: Software that holds your private key and signs transactions. MetaMask, Rabby, and Polymarket's embedded wallet are common choices. Bridging: Moving funds from one chain to another.
Oracle and resolution
Oracle: A system that brings real-world data on-chain. UMA: The optimistic oracle Polymarket uses to resolve markets. Dispute: A formal challenge to a proposed outcome; resolved by UMA token holders. Settlement: Paying out winners after a market resolves.
Regulatory terms
CFTC: Commodity Futures Trading Commission, the US regulator for derivatives. Event contract: A binary contract on a real-world event, as defined by the CFTC. DCM: Designated Contract Market, the CFTC license category Kalshi holds. No-action letter: A formal statement from the CFTC that it will not pursue enforcement against a specific activity (PredictIt's basis for operating). Geoblocking: Restricting access based on user location.