Betting

This section explains the process of participating in prediction markets on Bluff, from minting position tokens to redeeming them for collateral.

Minting Position Tokens

Participation in a Bluff market begins with minting a full set of outcome tokens. A user supplies collateral (e.g., USDC) to the market contract and, in return, receives a proportional quantity of tokens representing each possible outcome.

For example, in a binary market with "YES" and "NO" outcomes, a deposit of 1 USDC would yield a corresponding number of "YES" tokens and "NO" tokens, as determined by the market's collateralMultiplier.

This initial minting step is directionally neutral, as the user holds tokens for all possible outcomes. There is no fee for minting.

Trading Positions

Once a user holds a full set of outcome tokens, they can take a directional position by trading them on a supported Automated Market Maker (AMM).

• To take a "YES" position: Sell "NO" tokens.

• To take a "NO" position: Sell "YES" tokens.

Positions can be adjusted at any time before the market settles by buying or selling outcome tokens on the AMM.

Exiting a Position

There are two methods for exiting a position, depending on the market's settlement status.

1. Redeeming Before Settlement

Before a market is resolved, a user can exit a neutral position by redeeming a full set of outcome tokens (i.e., an equal number of "YES" and "NO" tokens).

The redeemTokens function burns the complete set of tokens and returns the user's proportional share of the collateral, less a 2.5% redemption fee. This allows users to exit the market early without taking a directional position.

2. Claiming Winnings After Settlement

After the market's oracle has reported the final outcome, the market is settled. At this stage, only the tokens corresponding to the winning outcome hold value.

A user can call the claimWinnings function to burn their winning tokens in exchange for a proportional share of the collateral. There is a 2% fee charged for claiming winnings, any swap fees from prior trades still apply.