Prediction Market Terminology: 80+ Terms Every Trader and Developer Should Know

This glossary defines 80+ terms used across prediction markets, organized alphabetically. Whether you are placing your first trade on Polymarket, building a trading bot against the Kalshi API, or evaluating regulatory frameworks, this reference covers the vocabulary you need.

For agent-specific terminology (copy-trading agents, sentiment bots, agent wallets, marketplace mechanics), see the companion Agent Betting Glossary. For sportsbook-specific terms (juice, handle, moneyline), see the Sportsbook Terminology guide. For a side-by-side comparison of how prediction markets and sportsbooks differ, see Sports Betting vs. Prediction Markets.

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A

Alpha

A measure of excess return generated above what a naive or benchmark strategy would produce. In prediction markets, alpha comes from superior information, faster execution, or better probability modeling. A trader who consistently buys Yes shares at 40 cents on markets that resolve Yes is generating alpha. See also: expected value (EV), edge.

AMM (Automated Market Maker)

A smart contract that provides liquidity through a mathematical pricing formula rather than a traditional order book. AMMs use liquidity pools where users deposit funds, and the contract automatically adjusts prices based on supply and demand. Early prediction markets like Augur v1 relied on AMMs (often using the LMSR formula). Polymarket and Kalshi now use CLOB-based systems instead, offering tighter spreads and more familiar trading mechanics. See also: CLOB, liquidity pool, LMSR.

API (Application Programming Interface)

A set of endpoints that allows software to interact with a prediction market platform programmatically. Traders and developers use APIs to fetch market data, place orders, check positions, and stream real-time price updates. Polymarket exposes three APIs (Gamma, CLOB, and Data), while Kalshi offers a REST API and WebSocket feeds. See the Prediction Market API Reference for full documentation.

Arbitrage (Arb)

The practice of exploiting price differences for the same event across two or more platforms to lock in a risk-free profit. If Polymarket prices a Yes outcome at 55 cents and Kalshi prices the equivalent No outcome at 40 cents, buying both guarantees a 5-cent profit regardless of the result. Cross-market arbitrage between prediction markets and sportsbooks is a growing strategy. See also: implied probability, overround.

Ask

The lowest price at which a seller is willing to sell a contract or share. The ask represents the cheapest available price for a buyer. The difference between the best bid and the best ask is the spread. On Kalshi, asks for Yes contracts are derived by inverting the No side’s bids. See also: bid, spread, order book.

B

Bid

The highest price a buyer is willing to pay for a contract or share. Bids are stacked in the order book from highest to lowest. When a seller places a market order, it fills against the best available bid. See also: ask, spread, order book.

Binary Contract

A financial instrument that pays a fixed amount (typically $1.00) if a specified event occurs and $0.00 if it does not. Binary contracts are the foundational instrument on prediction markets. Buying a Yes contract at 65 cents means paying $0.65 for a potential $1.00 payout, implying a 65% probability. Every market on Polymarket and Kalshi is structured as a binary contract or a set of binary contracts. See also: event contract, implied probability.

Book

The complete set of outstanding orders for a market. Short for order book. A “deep book” means there are many resting orders across multiple price levels, indicating strong liquidity. A “thin book” means few orders and high slippage risk. See also: order book, deep liquidity, thin market.

C

Callback

A function or URL that a system calls automatically when a specific event occurs. In prediction market development, callbacks are used to trigger actions when an order fills, a market resolves, or a price threshold is crossed. See also: webhook, endpoint.

CFTC (Commodity Futures Trading Commission)

The U.S. federal agency that regulates derivatives markets, including prediction markets structured as event contracts. The CFTC oversees designated contract markets (DCMs) like Kalshi and has authority to approve or reject event contract listings. The CFTC’s regulatory stance shapes which prediction markets can legally operate for U.S. residents. See also: DCM, event contract, no-action letter.

CLOB (Central Limit Order Book)

The matching engine that pairs buy and sell orders at specified prices on a prediction market exchange. In a CLOB system, traders place limit orders at their desired price, and the engine matches buyers with sellers when prices overlap. Polymarket uses a hybrid-decentralized CLOB (off-chain matching, on-chain settlement on Polygon). Kalshi uses a fully centralized CLOB. Both offer tighter spreads than AMM-based alternatives. See also: matching engine, limit order, market order.

Closing Line

The final market price at the moment a market stops trading or resolves. Beating the closing line consistently — buying below or selling above the final price — is a strong indicator of trading skill. Closing line value (CLV) is one of the most reliable metrics for measuring long-term edge. See also: edge, alpha.

Condition ID

A unique identifier for a specific market condition on Polymarket. Each market question (e.g., “Will Bitcoin exceed $100K by March?”) has a condition ID, which is used to derive the token IDs for the Yes and No outcome tokens. The condition ID is essential for programmatic order placement and position tracking via the CLOB API. Not to be confused with token ID. See also: CTF, token ID.

Conditional Market

A market that only activates or resolves based on the outcome of another market. For example, “Who will win the general election?” might spawn conditional markets like “What will GDP growth be if Candidate A wins?” Polymarket supports conditional markets through the Conditional Token Framework. See also: CTF, resolution.

Contract

A single unit of a prediction market position. On Kalshi, one contract pays $1.00 if the outcome occurs and $0.00 if it does not. The purchase price of a contract (ranging from $0.01 to $0.99) represents the market’s implied probability. On Polymarket, the equivalent unit is called a share or outcome token. See also: binary contract, event contract, outcome token.

CTF (Conditional Token Framework)

The smart contract standard originally developed by Gnosis that Polymarket uses to represent market positions. The CTF mints ERC-1155 tokens for each possible outcome of a market. A Yes token and a No token are created, each redeemable for 1 USDC if the associated outcome resolves as correct. The CTF enables composable, on-chain positions that can be traded or transferred between wallets. See also: Gnosis, ERC-1155, outcome token.

D

DCM (Designated Contract Market)

A CFTC-registered exchange authorized to list and trade event contracts in the United States. Kalshi holds DCM status, meaning it operates under federal regulatory oversight with requirements for market surveillance, reporting, and customer protection. DCM designation is the primary legal pathway for offering prediction markets to U.S. residents. See also: CFTC, event contract.

Deep Liquidity

A market condition where the order book contains a large volume of resting orders across many price levels. Deep liquidity means traders can execute large positions without significantly moving the price. Markets on major political events or high-profile outcomes tend to have deep liquidity. See also: liquidity, thin market, slippage.

DraftKings Predictions

The prediction market product offered by DraftKings, a major U.S. sports and entertainment platform. DraftKings Predictions allows users to trade event contracts on political, entertainment, and financial outcomes. Its integration with DraftKings’ existing user base gives it distribution advantages, though its market selection and liquidity currently lag behind Polymarket and Kalshi. See also: event contract, Kalshi, Polymarket.

E

Edge

The difference between a trader’s estimated probability of an outcome and the market’s implied probability. If you believe an event has a 70% chance of occurring but the market prices it at 60%, your edge is 10 percentage points. Positive edge, applied consistently with proper position sizing, generates long-term profit. See also: expected value (EV), Kelly criterion, alpha.

Endpoint

A specific URL path on an API that performs a defined function. For example, Polymarket’s /markets endpoint returns available markets, and Kalshi’s /portfolio/positions endpoint returns a user’s open positions. Each endpoint accepts certain parameters and returns data in a structured format (usually JSON). See the Prediction Market API Reference for endpoint catalogs.

ERC-1155

An Ethereum token standard that supports both fungible and non-fungible tokens within a single smart contract. Polymarket uses ERC-1155 to represent outcome tokens through the Conditional Token Framework. This standard allows a single contract to manage tokens for all outcomes across all markets, reducing gas costs compared to deploying separate contracts. See also: CTF, outcome token.

Event

A grouping of related markets under a single topic. On Polymarket, an event like “2026 US Midterm Elections” may contain dozens of individual markets (specific races, chamber control, etc.). On Kalshi, events group markets within a series. Events sit in the middle of the platform hierarchy: series (broad category) contains events (specific topics), which contain markets (individual questions). See also: market, series.

Event Contract

A derivative contract whose payout is tied to the occurrence or non-occurrence of a defined real-world event. The CFTC uses this term to describe the instruments traded on DCMs like Kalshi. Event contracts are distinct from traditional futures or options because their underlying is an event outcome rather than an asset price. See also: binary contract, CFTC, DCM.

Expected Value (EV)

The average profit or loss per unit wagered over the long run. EV is calculated by multiplying each possible outcome’s payout by its probability and summing the results. A positive EV (+EV) trade is one where the expected payout exceeds the cost. All profitable prediction market strategies are built on finding and exploiting +EV opportunities. See also: edge, Kelly criterion.

F

Fill

The execution of an order, either partially or completely. A “full fill” means the entire order was matched. A “partial fill” means only some of the requested quantity was executed at the specified price. Fill rates depend on available liquidity and order size. On Polymarket, you can choose between Fill-or-Kill (FOK) and Good-Till-Cancelled (GTC) order types. See also: limit order, market order, slippage.

FOK (Fill or Kill)

An order type that must be executed immediately and in its entirety, or it is cancelled. FOK orders are useful when partial fills would leave an undesirable position. If the order book does not have enough liquidity at the specified price to fill the complete order, the entire order is rejected. See also: GTC, fill, limit order.

G

Gnosis

The blockchain project that developed the Conditional Token Framework (CTF) used by Polymarket. Gnosis also built early prediction market platforms including Gnosis Safe (now Safe) for multisig wallets and the Gnosis Protocol for decentralized trading. The CTF remains one of the most widely adopted standards for on-chain prediction markets. See also: CTF, ERC-1155.

GTC (Good Till Cancelled)

An order type that remains active in the order book until it is filled or the trader cancels it. GTC orders are the default on most prediction market platforms. They allow traders to post limit orders at desired prices and wait for the market to come to them. See also: FOK, limit order, maker.

H

Hedging

The practice of taking an offsetting position to reduce risk on an existing trade. In prediction markets, hedging often involves buying the opposite outcome on a different platform or selling part of an existing position as the probability shifts. A trader holding Yes shares at 40 cents might sell some at 70 cents to lock in profit while keeping upside exposure. See also: risk management, PnL.

HMAC (Hash-based Message Authentication Code)

A cryptographic method used to authenticate API requests. Both Polymarket and Kalshi require HMAC signatures on trading requests to verify that the request originated from the account holder. Developers must include a timestamp and sign request payloads with their API secret key. Incorrect HMAC implementation is a common source of API authentication failures. See also: API, endpoint.

I

Implied Probability

The probability of an outcome as reflected by the current market price. On prediction markets, the price directly equals the implied probability: a contract trading at $0.72 implies a 72% probability. When the implied probabilities of all outcomes in a market sum to more than 100%, the excess represents the market’s overround or vig. See also: binary contract, overround, edge.

K

Kalshi

A CFTC-regulated prediction market exchange (Designated Contract Market) based in the United States. Kalshi offers event contracts on economics, politics, weather, and other topics. It uses a centralized CLOB, dollar-denominated contracts (each paying $1.00 on correct resolution), and requires KYC verification. Kalshi’s API supports REST and WebSocket interfaces. See the Kalshi API Guide for integration details. See also: DCM, CFTC, event contract.

Kelly Criterion

A mathematical formula for calculating the optimal fraction of capital to wager on a trade given the estimated probability and potential payout. The basic Kelly formula is: f* = (bp - q) / b, where b is the payout odds, p is the estimated probability, and q is 1 minus p. Most traders use fractional Kelly (half-Kelly or quarter-Kelly) to reduce variance. See also: edge, expected value (EV), risk management.

KYC (Know Your Customer)

Regulatory requirements that oblige financial platforms to verify the identity of their users. Kalshi requires full KYC (government ID, Social Security number for U.S. users). Polymarket operates with lighter verification requirements for non-U.S. users. KYC compliance determines which platforms a trader or agent can access. See also: CFTC, DCM.

L

Limit Order

An order to buy or sell a contract at a specific price or better. Limit orders rest in the order book until a matching counterparty appears. Traders who place limit orders are makers and typically pay lower fees. Limit orders give precise price control but have no guarantee of execution. See also: market order, maker, GTC.

Liquidity

A measure of how easily contracts can be bought or sold without causing significant price movement. Liquidity is determined by the depth and tightness of the order book. High-liquidity markets have many resting orders close to the current price. Low-liquidity markets have wide spreads and few resting orders, leading to slippage on larger trades. See also: deep liquidity, thin market, spread, slippage.

Liquidity Pool

A pool of capital locked in a smart contract that provides liquidity for an AMM-based market. Liquidity providers deposit funds and earn fees from trades executed against the pool. While common in DeFi trading, liquidity pools are less prevalent in modern prediction markets, which have largely shifted to CLOB-based designs for tighter spreads. See also: AMM, CLOB.

LMSR (Logarithmic Market Scoring Rule)

A pricing algorithm used by some AMM-based prediction markets to set prices. LMSR, developed by Robin Hanson, ensures that the market always has liquidity and that prices reflect current demand. The formula uses a liquidity parameter (b) to control how sensitive prices are to trade volume. Augur v1 and early Gnosis prediction markets used LMSR. Modern platforms have largely moved to CLOB designs. See also: AMM, CLOB.

M

Maker

A trader who adds liquidity to the order book by placing a limit order that does not immediately execute. Makers “make” the market by posting prices at which they are willing to buy or sell. Most platforms reward makers with lower fees or rebates. On Polymarket, makers can receive fee rebates through the Maker Rewards Program. See also: taker, limit order, spread.

Market

A single tradeable question with defined resolution criteria and an expiry date. “Will the Fed cut rates in March 2026?” is a market. Each market has a unique identifier — a slug on Polymarket or a ticker on Kalshi — and belongs to an event. Markets define the specific outcomes available for trading and the rules under which they resolve. See also: event, series, resolution.

Market Maker

A participant (often a firm or bot) that continuously posts both buy and sell orders to provide liquidity in a market. Market makers profit from the spread between their bid and ask prices. Prediction market market makers must manage inventory risk, as holding large positions in one direction exposes them to resolution risk. See the Agent Betting Glossary for agent-specific market-making terms.

Market Order

An order to buy or sell immediately at the best available price. Market orders guarantee execution but not price. On thin markets, large market orders can experience significant slippage as they eat through multiple price levels in the order book. Traders prioritizing speed over price use market orders. See also: limit order, taker, slippage.

Matching Engine

The software system that pairs buy orders with sell orders in a CLOB. The matching engine maintains the order book, processes incoming orders, determines which orders match, and executes trades. Polymarket’s matching engine operates off-chain for speed, with settlement on the Polygon blockchain. Kalshi’s matching engine runs on centralized infrastructure. See also: CLOB, fill.

Mean Reversion

A trading strategy based on the assumption that prices that move sharply in one direction will tend to return toward their average. In prediction markets, mean reversion strategies buy outcomes that have dropped sharply on news that may be overreacted to, or sell outcomes that have spiked on hype. This approach works best in liquid markets with stable fundamentals. See also: momentum, alpha.

Mid-Price

The midpoint between the best bid and the best ask in an order book. The mid-price is often used as the “fair value” reference when the spread is wide. If the best bid is 60 cents and the best ask is 64 cents, the mid-price is 62 cents. Agents and pricing models commonly use mid-price as a starting point for evaluating trades. See also: bid, ask, spread.

Momentum

A trading strategy that follows the direction of recent price trends, buying outcomes whose prices are rising and selling those whose prices are falling. In prediction markets, momentum strategies can profit from information cascades — when new information causes sustained directional moves as more traders react. Momentum is the conceptual opposite of mean reversion. See also: mean reversion, alpha.

N

Negative Risk Market

A Polymarket market type where the sum of all outcome token prices can exceed $1.00. This occurs in multi-outcome markets where certain outcome combinations create arbitrage opportunities. Negative risk markets require special handling in API interactions: the tick size changes, order signing logic differs, and the CTF exchange contract used is different from standard markets. This is a frequent source of bugs in trading bots. See also: CTF, arbitrage.

No-Action Letter

A letter from a regulatory agency (typically the CFTC) stating that the staff will not recommend enforcement action against a particular activity. Prediction market platforms have historically sought no-action letters to operate in the U.S. before formal DCM registration became the standard path. These letters provide regulatory clarity but do not constitute full approval. See also: CFTC, DCM.

O

Open Interest

The total number of outstanding contracts or shares that have been traded but not yet settled or closed. High open interest indicates an active market with many participants holding positions. Open interest increases when new positions are created and decreases when existing positions are closed or markets resolve. See also: volume, liquidity.

Oracle

A system or entity that provides external real-world data to a prediction market for the purpose of resolving markets. Oracles determine whether an event occurred by referencing authoritative data sources. Polymarket uses UMA’s optimistic oracle, where resolution outcomes can be proposed by anyone and disputed within a challenge window. Kalshi acts as its own centralized oracle, resolving markets based on predefined data sources. Oracle reliability is critical — incorrect or delayed resolution undermines market integrity. See also: UMA, resolution, settlement.

Order Book

The electronic record of all active buy (bid) and sell (ask) orders for a given market, organized by price level. The order book is the core data structure in a CLOB system. Traders and agents analyze order book depth to assess liquidity, estimate slippage, and plan execution. On Polymarket, both sides of the book are available via API. On Kalshi, you must derive one side by inverting the other. See the Prediction Market API Reference for order book endpoints.

Outcome Token

A digital asset representing a single possible outcome in a prediction market. On Polymarket, outcome tokens are ERC-1155 tokens minted via the Conditional Token Framework. Each token is redeemable for $1.00 USDC if its associated outcome resolves as correct. On Kalshi, the equivalent concept is a contract. See also: CTF, ERC-1155, resolution.

Overround

The amount by which the total implied probabilities of all outcomes in a market exceed 100%. Overround represents the market’s built-in margin or vig. A market with Yes at 53 cents and No at 49 cents has a total of 102 cents, meaning a 2% overround. Lower overround indicates a more efficient and competitive market. See also: implied probability, spread, vig.

P

PnL (Profit and Loss)

The net financial result of a trading position or portfolio. Unrealized PnL reflects the gain or loss of currently open positions based on current market prices. Realized PnL reflects the actual gains or losses from closed trades and resolved markets. Tracking PnL by market, time period, and strategy is essential for evaluating performance. See also: ROI, alpha.

Polymarket

A crypto-based prediction market platform operating on the Polygon blockchain. Polymarket uses a hybrid-decentralized CLOB (off-chain matching, on-chain settlement) and the Conditional Token Framework for position representation. Markets trade in USDC, and positions are represented as ERC-1155 tokens. Polymarket has emerged as the largest prediction market by volume, particularly for political and crypto events. See the Polymarket API Guide for integration details. See also: CTF, CLOB, outcome token.

Position

A trader’s current holdings in a specific market. A position is defined by the outcome (Yes or No), the number of shares or contracts held, and the average entry price. Managing positions — deciding when to add, reduce, or close — is central to prediction market trading. See also: open interest, PnL.

Proxy Wallet

A smart contract wallet that acts on behalf of a user, enabling automated trading without exposing the user’s primary private keys. On Polymarket, each user interacts through a proxy wallet managed by the platform’s smart contracts. Proxy wallets allow the CLOB operator to execute trades on behalf of users while keeping funds custodied by the user’s underlying wallet. Understanding proxy wallet architecture is essential for developers building trading bots. See also: CTF, API.

R

Rate Limit

A restriction on the number of API requests a client can make within a given time period. Prediction market APIs enforce rate limits to prevent abuse and maintain system stability. Polymarket’s CLOB API limits requests per second, and exceeding the limit returns HTTP 429 errors. Developers must implement request throttling, caching, and backoff strategies. See the Polymarket Rate Limits Guide for platform-specific limits.

Regulatory Arbitrage

The practice of exploiting differences in regulation across jurisdictions. In prediction markets, regulatory arbitrage may involve operating in jurisdictions with more permissive rules, or structuring products to fall outside certain regulatory definitions. Polymarket operates offshore for U.S. regulatory reasons, while Kalshi operates as a CFTC-regulated DCM within the U.S. See also: CFTC, DCM, KYC.

Resolution

The process by which a prediction market determines the outcome of an event and settles all contracts. Resolution can be centralized (a designated oracle or the platform itself determines the outcome), decentralized (on-chain oracles or community voting), or hybrid. On Polymarket, UMA’s optimistic oracle is used for dispute resolution. On Kalshi, the platform resolves markets based on predefined criteria. See also: settlement, UMA.

REST (Representational State Transfer)

An architectural style for building web APIs that uses standard HTTP methods (GET, POST, PUT, DELETE) to interact with resources. Both Polymarket and Kalshi expose REST APIs for market data retrieval, order management, and account operations. REST APIs are stateless and return data in JSON format. See also: API, endpoint, WebSocket.

Risk Management

The set of practices used to control the potential for financial loss. In prediction markets, risk management includes position sizing (often via the Kelly criterion), portfolio diversification across uncorrelated markets, setting maximum loss thresholds, and hedging. Effective risk management distinguishes profitable traders from those who blow up on variance. See also: Kelly criterion, hedging, stop loss.

ROI (Return on Investment)

The percentage return on capital deployed, calculated as (profit / capital invested) x 100. ROI is a standard measure for evaluating trading strategy performance. A trader who invests $1,000 across prediction markets and nets $150 in profit has a 15% ROI. ROI should be evaluated in conjunction with the time period and risk taken. See also: PnL, alpha.

S

SDK (Software Development Kit)

A collection of libraries, tools, and documentation that simplifies integration with a platform’s API. Polymarket provides py-clob-client (Python) and clob-client (TypeScript). Kalshi offers kalshi-python. SDKs abstract away low-level concerns like HMAC signing, request formatting, and WebSocket management. See the Prediction Market API Reference for SDK documentation.

Series

A broad category that groups related events on a prediction market platform. On Kalshi, a series like “US Presidential Election” contains multiple events, each with individual markets. Series provide the highest level of the platform’s content hierarchy: series contains events, which contain markets. On Polymarket, the equivalent organizational layer uses tags and categories rather than a formal series structure. See also: event, market.

Settlement

The process of distributing payouts after a market resolves. Winning contracts pay $1.00 (or the equivalent in USDC), and losing contracts pay $0.00. On Polymarket, settlement occurs on-chain: winning outcome tokens are redeemed for USDC via the CTF contract. On Kalshi, settlement is handled by the platform and credited to user accounts. Settlement timing varies by platform and event type. See also: resolution, contract.

Share

A single unit of an outcome position on Polymarket. One share of a Yes outcome is worth $1.00 USDC if the market resolves Yes, and $0.00 if it resolves No. Shares are represented on-chain as ERC-1155 outcome tokens via the Conditional Token Framework. On Kalshi, the equivalent unit is called a contract. See also: outcome token, contract, CTF.

Sharping

The practice of targeting soft lines or inefficient prices in prediction markets, typically before the market has fully incorporated new information. The term originates from sports betting, where “sharps” are sophisticated bettors who move lines. In prediction markets, sharping involves trading on information edges before the broader market adjusts. See also: closing line, edge, alpha.

Slippage

The difference between the expected execution price and the actual price received when an order fills. Slippage occurs when a market order or large limit order eats through multiple levels of the order book. In thin markets, slippage can be substantial. Traders can minimize slippage by using limit orders, breaking large orders into smaller pieces, or targeting markets with deep liquidity. See also: thin market, deep liquidity, market order.

Spread

The difference between the best bid and the best ask in an order book. A tight spread (e.g., 1 cent) indicates a competitive, liquid market. A wide spread (e.g., 5-10 cents) indicates lower liquidity or less agreement on fair value. The spread is the cost of immediacy — traders who cross the spread pay the difference as an implicit fee. See also: bid, ask, mid-price, maker.

Stop Loss

A predetermined price level at which a trader exits a losing position to limit downside. In prediction markets, stop losses can be implemented by placing sell orders at a specific price below the entry point. Automated agents can monitor prices via WebSocket and execute stop loss orders programmatically. See also: risk management, PnL.

T

Taker

A trader who removes liquidity from the order book by placing an order that immediately matches with an existing resting order. Takers “take” the prices posted by makers. Taker orders include market orders and limit orders that cross the spread. Takers typically pay higher fees than makers. See also: maker, market order, spread.

Thin Market

A market with limited order book depth and low trading volume. Thin markets are characterized by wide spreads, large slippage on modest orders, and prices that can swing dramatically on small trades. Markets on niche or far-future events tend to be thin. Trading in thin markets requires patience and limit orders. See also: deep liquidity, slippage, spread.

Tick Size

The minimum price increment for orders in a market. On Polymarket, the standard tick size is $0.01 (1 cent) for regular markets and $0.001 for negative risk markets. On Kalshi, the tick size is $0.01. Tick size determines the granularity of price levels in the order book and affects the minimum spread. See also: spread, order book.

Token ID

A unique identifier for a specific outcome token on Polymarket. Each market outcome has its own token ID, derived from the market’s condition ID and the outcome index. Traders must use the correct token ID when placing orders through the CLOB API. Confusing Yes and No token IDs is a common error in bot development. See also: CTF, condition ID, outcome token.

U

UMA (Universal Market Access)

A decentralized oracle protocol used by Polymarket for market resolution. UMA’s optimistic oracle allows anyone to propose a resolution outcome, and the proposal is accepted unless disputed within a challenge period. Disputed resolutions are escalated to UMA token holders who vote on the correct outcome. This system decentralizes the resolution process while maintaining accuracy. See also: resolution, settlement.

V

Vig (Vigorish)

The built-in fee or margin extracted from market participants, analogous to the “juice” in sports betting. In prediction markets, vig manifests as the overround — when the prices of all outcomes in a market sum to more than $1.00. A market with 2% overround effectively charges traders 2% in aggregate. Vig on major prediction market platforms is generally lower than on traditional sportsbooks. See also: overround, spread.

Volume

The total number of contracts or shares traded in a market over a given period. High volume indicates active trading interest and often correlates with tighter spreads and better liquidity. Volume is distinct from open interest: volume measures total trading activity, while open interest measures outstanding positions. See also: open interest, liquidity.

W

Webhook

A mechanism where a server sends automated HTTP requests to a specified URL when a particular event occurs. In prediction market integrations, webhooks can notify external systems of order fills, market resolutions, price changes, or account balance updates. Webhooks enable event-driven architectures without requiring constant polling. See also: callback, API, endpoint.

WebSocket

A communication protocol that provides a persistent, full-duplex connection between a client and server. Prediction market platforms use WebSocket feeds to stream real-time order book updates, trade executions, and price changes. WebSocket connections are more efficient than polling REST endpoints for live data. Both Polymarket and Kalshi offer WebSocket APIs for market data and order status. See also: REST, API.

Quick Reference Table

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