Binary Markets Explained

The most common market type on Polymarket is the Binary Market. It asks a question with only two possible outcomes: YES or NO.

The Math of $1.00

In a binary market, the price of Yes and No will (almost) always sum to $1.00.

• If Yes costs 60¢ ($0.60).
• Then No will cost 40¢ ($0.40).
• Total = $1.00.

This is because ultimately, only one will happen.

• If the event happens: Yes shares redeem for $1.00, No shares become $0.00.
• If the event doesn't happen: No shares redeem for $1.00, Yes shares become $0.00.

Probability Interpretation

You can read the price directly as a probability percentage.

• Price: 34¢ = Probability: 34%.
• Price: 99¢ = Probability: 99% (Virtually certain).

Making Money

You profit by buying low and selling high (or holding to redemption).

Scenario:

1. You think "Bitcoin > $100k in 2024" is likely.
2. Market price for Yes is 20¢.
3. You buy 100 shares for $20.
4. Good news comes out, price jumps to 50¢.
5. You can now sell your 100 shares for $50.
6. Profit: $30 (150% gain).

Or, you wait until December 31, 2024.

• If Bitcoin is > $100k, your shares redeem for $100 (Profit: $80).
• If Bitcoin is < $100k, your shares are worth $0 (Loss: $20).