> For the complete documentation index, see [llms.txt](https://docs.axiomprotocol.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.axiomprotocol.io/whitepaper/how-axiom-works/prediction-market.md). # Prediction Market Axiom uses a Central Limit Order Book backed by Conditional Tokens. Instead of pushing every trade into a shared outcome pool, Axiom lets users buy and sell outcome tokens through an order book with onchain settlement. This gives users a more familiar trading experience: * You can post a price and wait for someone to trade against you. * You can take liquidity immediately if you want instant execution. * You can hold positions through resolution and redeem winning tokens afterward. *** ### **How Trading Works** Every CLOB market is built from a Conditional Tokens structure. For a binary market: * YES pays `1.00` if YES wins and `0.00` if YES loses. * NO pays `1.00` if NO wins and `0.00` if NO loses. Users trade these tokens through the order book. There are two main ways to participate: 1. **Trade existing liquidity** * Buy outcome tokens from sellers. * Sell outcome tokens you already hold. 2. **Create inventory** * Mint a complete set of outcomes. * Sell the side you do not want. * Keep the side you want as your directional position. This means positions are tradable before resolution. Axiom is no longer limited to locked bets in a prize pool. *** ### **Order Book Basics** The order book shows all resting demand and supply for an outcome. Key terms: * **Bid**: highest price a buyer will pay * **Ask**: lowest price a seller will accept * **Spread**: difference between best bid and best ask * **Depth**: how much size is available at each price level * **Maker**: resting order that adds liquidity * **Taker**: incoming order that removes liquidity Orders match using **price-time priority**: 1. Better prices match first. 2. If prices are tied, earlier orders match first. *** ### **What Happens Onchain vs Offchain** The matching engine runs offchain for speed, but settlement remains onchain. * Offchain services maintain the live order book and match signed orders. * `AxiomCTFExchange` settles matched trades atomically onchain. * `AxiomConditionalTokens` holds the ERC-1155 outcome positions. * `AxiomCTFMarket` resolves the condition when governance finalizes the result. This gives users low-latency trading without sacrificing an onchain source of truth for final fills. *** ### **Complete Sets and Redemption** Conditional Tokens markets have one important property: If you hold one share of every outcome, you hold a **complete set** worth full collateral value. That enables: * minting complete sets when you want to create inventory * merging full sets back into collateral when appropriate * redeeming winning positions after resolution After the market resolves: 1. The winning outcome is reported onchain. 2. Winning tokens become redeemable for collateral. 3. Users redeem their positions and receive the corresponding payout. *** ### **Trading Fees** CLOB markets charge fees on settled trades, not on redemption. The current live fee model is: * `0.50%` to the dev treasury * `0.25%` to the staker fee recipient * `0.25%` to the incentives recipient Total protocol trade fee: `1.00%` The fee is enforced during onchain settlement through `AxiomCTFExchange`. *** ### **What Users See in the Interface** Axiom’s trading UI now centers on real market structure rather than pool math. Users see: * best bid and ask * spread * order book depth * last trade price * recent fills * open orders * current positions by outcome Example: ``` XRP > $3.00 by Friday? Best bid: 0.41 Best ask: 0.43 Spread: 0.02 Your order: Buy YES @ 0.42 Status: Resting on the book If filled: You become the taker only if you cross the ask. If someone sells into your order: You are the maker. ``` *** ### **Resolution and Settlement** Once the event occurs: 1. A top 50 percent staker submits the first proposal. 2. If unchallenged, the market auto-resolves. 3. If challenged, a vote is triggered. 4. Once finalized, the winning outcome is recorded onchain. 5. Users redeem winning tokens for the settlement asset. Governance rewards and penalties are applied through Axiom Prime, while trading positions settle through the CLOB and Conditional Tokens market stack. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.axiomprotocol.io/whitepaper/how-axiom-works/prediction-market.md?ask= ``` The question should be specific, self-contained, and written in natural language. 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