Settlement
Settlement is the process where a prediction market contract is finalized and paid out based on the resolved outcome under the market rules.
Definition
Settlement is the process where a prediction market market is finalized: the outcome is determined under the market rules and positions receive their payout.
What typically happens
• The market reaches expiration or a defined end condition.
• The platform determines the outcome using a defined settlement source.
• Contracts or shares are paid out and the market stops trading.
Why it matters for traders
Settlement defines what “being right” actually means. It also affects liquidity: spreads can widen near expiration and execution costs can rise, increasing round trip cost.
Common pitfalls
Not reading rules: The outcome can be defined more narrowly than expected.
Ignoring timing: Trading and liquidity conditions often change sharply close to expiration.