Futarchy Markets

In price-based futarchy markets, participants trade based on their expectations of how specific decisions will impact the price of a token, which serves as the key metric for evaluation.

For example, Gnosis DAO could create a prediction market to determine whether a proposal should be accepted, using the GNO/wstETH trading pair as the measurable metric.

The proposal would be accepted if the market predicts that the price of YES_GNO/YES_wstETH will exceed the price of the NO_GNO/NO_wstETH.

Right now, futarchy markets are only available on Gnosis Chain.

Create a futarchy market

On the Futarchy page, click the Create new Proposal.

1. Input the proposal title:

   

2. Choose the collateral tokens:

   In the previous example, GNO is the token, and wstETH is the currency.

   The market will generate four outcome tokens: YES_GNO, NO_GNO, YES_wstETH, and NO_wstETH.

   These tokens will be traded across two liquidity pools: YES_GNO/YES_wstETH (called "yes pool") and NO_GNO/NO_wstETH (called "no pool").

   
3. Specify an opening date. The market can only be resolved after the opening date:

   

4. Preview the market:

   

After previewing, click Create Market.

An instance of the FutarchyProposal contract will be deployed at a new address as an on-chain representation of the proposal.

You can view the proposal address by clicking the network icon in the top right corner of the market page:

The process for verifying the market follows the same steps outlined earlier for standard markets

Market Page

Some differences with standard markets:

1. YES and NO tokens can be traded directly with each other, instead of being traded against a shared collateral token like sDAI. To obtain these tokens, you first need to split either the token or the currency underlying.

   For example, you can split GNO to receive YES_GNO and NO_GNO, and then trade NO_GNO for NO_wstETH.

2. No invalid tokens: A proposal is well defined and can either pass or fail, so no need of invalid tokens. If the market resolves as invalid, the proposal is automatically considered failed.

Mint, merge conditional outcome tokens

The process is similar to that of a simple market, with a few key differences:

1. Minting: You can mint outcome tokens using either the token or the currency underlying.

2. Merging: Depending on the outcome tokens you hold, you can merge them back into either the token or the currency underlying.

Resolve conditional market and redeem conditional outcome tokens

You would resolve the market as normal. However, after a futarchy market is resolved, instead of redeeming sDAI (or xDAI), you will redeem token and/or currency underlying.