Definition
Binary market
A prediction market with exactly two complementary outcomes.
A binary market is a prediction market with exactly two complementary outcomes. Each outcome is mutually exclusive and represents the event either occurring (YES) or not occurring (NO). At fair value, the prices of the two outcomes sum to $1.00, reflecting the single-dollar payout structure: each share pays $1.00 if its outcome resolves YES and $0.00 if it resolves NO.
Key takeaways
- A binary prediction market has two outcomes only: YES and NO.
- Prices represent probabilities in dollar form and should sum to $1.00 at fair value.
- On Polymarket each outcome is an ERC-1155 CTF token that can be split, merged, transferred, and redeemed for $1.00 after resolution.
In context
On Polymarket you encounter binary markets when a question can be answered with a yes/no outcome. The CLOB shows separate order books for YES and NO; because both outcomes share the same $1.00 payoff structure, their best ask prices are directly comparable. Traders performing intra-market arbitrage or hedging watch the pair together — for example, an edge appears when bestAsk(YES) + bestAsk(NO) < $1.00, allowing a complete-set purchase that locks a mathematical spread (subject to resolution, slippage, fees, and settlement risks).
See also
- /glossary/yes-no
- /glossary/multi-outcome