// GLOSSARY

Binary contract

A contract that pays a fixed amount (usually $1) if an event happens and nothing if it doesn't. Prediction-market prices are therefore probabilities: a 42¢ yes contract implies a 42% market-assigned chance.

A binary contract settles to exactly one of two values — on Kalshi and Polymarket, $1 if the event resolves yes and $0 if it resolves no. Because the payoff is fixed, the price is the market's probability estimate.

Worked example

You buy 100 yes contracts at 42¢. Cost: $42 (plus any fees). If the event resolves yes, they settle at $1 each — $100 back, $58 profit. If no, they expire worthless.

The same logic runs in reverse for the no side: buying no at 58¢ is the mirror of selling yes at 42¢.

On Kalshi and Polymarket

Kalshi quotes binaries in cents (1–99¢); Polymarket quotes them as decimal probabilities (0.01–0.99) and settles them as ERC-1155 outcome tokens in USDC. Same instrument, different plumbing — which is why comparing prices across venues requires normalizing fees first.