// GLOSSARY

Settlement

The final exchange of value once a market resolves: winning contracts pay out ($1 on Kalshi; redeemable outcome tokens in USDC on Polymarket), losing ones expire at zero. The step where paper P&L becomes cash — and where timing risk lives.

Settlement is the end of a contract's life. After resolution determines the outcome, the venue pays winners and zeroes losers: on Kalshi, $1 per winning contract credited to your balance; on Polymarket, winning ERC-1155 outcome tokens become redeemable for $1 of USDC each.

The timeline

Trading close, resolution, and payout are three separate moments. A market can close today, resolve days later (data releases, certified results, or a UMA dispute window on Polymarket), and pay after that. Until payout, your capital is committed and unhedgeable — settlement lag is a real cost of carry for strategies that recycle capital, like arbitrage.

Practical notes for bots

Track position state through open → closed → resolved → settled explicitly, and reconcile settled cash against expected payout per market — venues expose settlement data via API (fields and timing per the venue docs). Mispriced settlement lag has eaten more than one "riskless" cross-venue spread.