Prediction market resolution.

Resolution is how a market decides what happened and pays out on it. It is worth more attention than most traders give it, because it is the one part that can take a winning position away from you.

What does prediction market resolution mean?

The step between the event finishing and your account changing. The venue determines the outcome, applies it to every open position, and releases the collateral. Everything about who was right was already decided by then, so resolution is only about how the answer gets established.

Who decides the outcome?

It depends on the venue, and the answers are further apart than they look. One venue reads a named external source. Another leaves the call to an internal team. A third puts it to a vote of token holders, with a window in which the result can be challenged and reopened.

On a quiet question with small size, all three feel identical. They stop feeling identical when the outcome is close and somebody has real money on the other side.

What is a dispute window?

A period after a proposed outcome during which someone can challenge it, usually by posting a bond. If nobody challenges, the result stands. If somebody does, it escalates to whatever the venue uses to break ties, which in token voted systems means holders decide.

That design is defensible for questions with no clean data source. The cost is that your payout is not final when the event finishes, and the size of your position is exactly what makes a challenge worth funding.

What does resolution without discretion look like?

Everything that could be decided gets decided before trading opens, and written down.

A RAVA market names the administrator, the level it reads, and what happens if that level is late or missing, all before anyone trades. At the end of the window settlement reads the number and applies a published rule. There is no vote, no challenge period, and nothing for anyone to interpret.

Why does this decide who can trade the market?

A desk marks its positions daily, and marking one means knowing what it pays under every outcome. If a payout can be overturned by a vote, that figure does not exist, only an estimate of how a vote might go. It cannot be modelled and it will not pass a risk committee, so the venue is closed to that money whatever else it offers.

The question to ask any venue.

What happens if the outcome is close and somebody with real size disagrees. If the answer involves people deciding, you are holding a view about a process as well as about the number. If it involves reading a published figure, you are holding the exposure you paid for.

The wider comparison is in scalar vs binary prediction markets, and the live rules are in settlement and the index.