Outcome Tokens

Leveraging ERC-1155 Tokens II Speculate On Markets.

Outcome tokens are fungible ERC-1155 tokens, with a different token for each outcome of a market. There are three ways to acquire outcome tokens, the first is directly staking into a Market and receiving newly minted outcome token. The second is via our mint/burn exchange, where users can exchange one outcome token for another directly via the Market contract. The third is via the AMM.

Providence is agnostic as to how users acquire their tokens. Since the relative likelihood thus implied value of a particular token is derived from its total supply relative to the other outcome tokens for that market. In simple terms the more of a particular outcome token there is in existence relative to the other outcomes, the more likely users consider the outcome, and thus offers lower returns. The relationship is formalised (for users staking or exchanging via the Mint/Burn mechanism) in the Exchange Rate Adjustment and Staking sections.