Outcome Shares

When you make a prediction on Precog, you are not placing a bet with a bookmaker. You are buying outcome shares: onchain tokens that represent a stake in a specific result.

What You’re Buying

Every market has a set of possible outcomes. Precog supports multiple outcomes in a single market, not just Yes/No. A market might have three, five, or more options (e.g., Outcome A / Outcome B / Outcome C). Each outcome has its own share.

• 1 share of the winning outcome = 1 collateral token at resolution
• 1 share of any losing outcome = 0

The price of a share at any moment equals the market’s current implied probability for that outcome. If “Outcome B” is priced at 0.35, the market believes there is a 35% chance of Outcome B winning.

Price = Probability

This is the core insight. The share price and the probability are the same number expressed differently:

When you buy a share, you are expressing a belief that the true probability is higher than the current price. When you sell, you are either locking in a gain (price went up) or cutting a loss (price went down).

All outcome prices in a market add up to approximately 1. In a three-outcome market priced at Outcome A: 0.45 / Outcome B: 0.35 / Outcome C: 0.20, the sum is 1. Buying one outcome slightly lowers the implied probability of all the others.

How Prices Move

Prices are set by the LS-LMSR curve, not by a matching order book. Every trade shifts the price:

• Buying an outcome increases its price (and slightly decreases the others)
• Selling decreases its price

This means your trade itself moves the market. Larger trades have more impact. Check the price impact shown at checkout before confirming.

See Understanding Outcomes Pricing for a deeper look at the curve mechanics.

Selling Before Resolution

You can sell your shares at any time before the market closes. The curve will buy them back at the current price.

Selling makes sense if:

• The probability has moved in your favor and you want to lock in profit
• New information changes your view and you want to cut your loss
• You need the capital back before resolution

Selling forgoes the full 1-token payout if your outcome ends up winning. It is a tradeoff between certainty now and potential upside later.

Fees

Buying outcome shares has no fee. You pay the curve price and receive shares, nothing extra.

Selling may incur a fee, depending on the market. Selling fees, when present, are split between LPs, the market creator, and the protocol. The exact amount is shown before you confirm a sale.

Collateral Tokens

Any ERC-20 token can be used as collateral on Precog. Each market specifies which token it uses. If you’re looking to participate in a market denominated in a community or ecosystem token, see Branded Markets for context on how those are set up.

What You Can Lose

Your maximum loss on any position is the amount you paid for the shares. If the outcome loses, those shares pay out nothing.

There is no partial credit for being “close” or for the probability being high at close. Resolution is binary per outcome: it either wins or it doesn’t.

Example: You buy 100 Outcome B shares at 0.35 (cost: 35 tokens). Outcome A wins instead. You lose the full 35 tokens. Had you sold your Outcome B shares earlier when the price moved to 0.55, you would have received 55 tokens and locked in a 20-token profit.

Shares Are Onchain

Outcome shares are ERC-20 tokens held directly in your wallet. You own them; Precog has no custody. They can be viewed in any wallet that supports ERC-20 token balances, though they are only redeemable through the Precog protocol at resolution.