Resources · Glossary

POTS Glossary
Prediction Markets, Plain Language.

Definitions for every key term in the POTS ecosystem: prediction market mechanics, DeFi infrastructure, and protocol-specific concepts — from AMM to Yes/No tokens.

A
AMM (Automated Market Maker)

A price-setting mechanism that uses the ratio of assets in a liquidity pool. No order book — when you trade Token A for USDT, the new ratio becomes the new price. Formula: constant product x × y = k.

B

An ERC1155 token representing one side of a two-outcome prediction. Yes tokens and No tokens always sum to $1.00. Token price = implied probability. At resolution, winning tokens pay $1.00; losing tokens pay $0.

Bond Owned Yield (BOY)

A Pots Money yield mechanism where users purchase IBS bonds with USDT. The smart contract forms a 50/50 IBS/USDT LP position, locks it via POL, and distributes yield daily with principal released linearly.

An application that routes prediction market orders through Polymarket's shared CLOB. Pots Market operates as a Polymarket Builder — sharing the same orderbook, settlement contracts, and liquidity.

C

An order book where buy and sell orders are listed by price. Orders match when bid + ask = $1.00. Pots Market shares Polymarket's CLOB — there is no separate orderbook. All users access the same depth.

CTF Exchange

The Gnosis Conditional Token Framework Exchange contract on Polygon. Audited by ChainSecurity. Settles all matched prediction market trades atomically on-chain.

D

Financial services built on smart contracts — lending, trading, liquidity, and structured products — without centralized custodians. Transparent, verifiable, and accessible to anyone with a wallet.

DEX (Decentralized Exchange)

A trading system where users retain custody of their assets and trades execute via smart contracts. No central operator holds funds or processes withdrawals.

E
EIP-712

Ethereum standard for typed, structured data signing. All Pots Market orders are EIP-712 signed — meaning they are cryptographically signed by your private key. The operator cannot modify or forge orders.

ERC1155

Ethereum token standard that supports multiple token types in a single contract. All Pots Market Yes/No tokens are ERC1155 — fully on-chain, transferable, and resolvable via the CTF Exchange.

G
Gnosis CTF (Conditional Token Framework)

A smart contract framework for creating and settling conditional tokens. The infrastructure layer underlying all Pots Market binary outcome tokens. Every Yes/No pair is minted and settled via the CTF.

I

The native token of Pots Money. Algorithmic monetary token: elastic supply, backed by ≥$1 USD equivalent in LP collateral per unit. Not a stablecoin — a structured monetary asset. Contract: 0x255e…A7cd on BSC.

Implied Probability

The probability that a prediction market price encodes. Yes token at $0.65 = 65% implied probability. This is not a convention — it is a mathematical identity enforced by the token structure.

L
Liquidity Provider (LP)

A user who deposits assets into a pool to provide tradable inventory. In DeFi, LPs earn fees from every trade that uses their liquidity and bear risk from price changes (impermanent loss).

Liquidation Mechanism

A DeFi risk control system that forces position balancing before collateral becomes insufficient. Protects the solvency of lending and staking protocols. Executes automatically via smart contracts.

M
Maker (Order)

A limit order that sits in the orderbook waiting to be filled. Makers add liquidity to the CLOB. On Pots Market, makers earn daily rebates in USDC — they never pay fees.

Maker Rebate

A reward paid to limit order placers. On Pots Market, maker rebates are paid daily in USDC directly to your wallet by Polymarket — proportional to filled maker volume per market.

Merge

The operation of combining one Yes token + one No token back into $1.00 collateral. Used to exit a prediction market position without waiting for resolution. Inverse of Split.

N
Non-Custodial

A system where users retain control of their assets at all times. In non-custodial prediction markets, the operator cannot freeze withdrawals, access funds, or modify settlement. Assets never leave the user's wallet.

O
Oracle

A system that delivers real-world data to smart contracts. Smart contracts cannot read external information — oracles provide price feeds, event outcomes, and external states. Prediction market resolutions rely on oracle inputs.

P

The mechanism connecting Pots Money and Pots Market. Converts IBS protocol revenue into POTS governance tokens distributed to IBS stakers over a 500-day deflation auction.

POL (Protocol Owned Liquidity)

Liquidity owned permanently by the protocol treasury rather than third-party LPs. In Pots Money, bond purchases create POL — LP positions locked in the protocol indefinitely, removing the risk of LP withdrawal.

The fixed-supply governance token of Pots Market. 21,000,000 total, non-inflationary. Used for prediction market incentives and DAO governance. Distributed via the PBM 500-day auction. Contract: 0x5FBA…747f on BSC.

A trading venue where the price of a contract represents the collective probability of a future event. Participants commit real capital — creating accurate, self-correcting probability signals.

R
RBS (Reserve Bond Supply)

A secondary reserve buffer in Pots Money that absorbs IBS price volatility. Acts as a backstop between the primary LP collateral and the Safety Treasury during market stress.

Redeem

The operation of exchanging winning prediction tokens for $1.00 collateral after market resolution. Executed on-chain via the CTF Exchange — 100 winning tokens → $100 pUSD.

S
Safety Treasury

The last-resort defense layer of Pots Money. Protocol-owned treasury maintained to ensure long-term solvency even under extreme market conditions. Backed by diversified on-chain assets.

Settlement

The final on-chain recording of a matched trade. In Pots Market, settlement is atomic — trades execute in full or not at all — on Polygon via the CTF Exchange contract.

All orders from Pots Market, Polymarket.com, and other Builder apps route to the same CLOB. Same depth, same prices, same market makers — no fragmentation.

Smart Contract

Code stored on a blockchain that executes automatically when conditions are met. No intermediary, approval, or manual step required. Replaces institutional trust with transparent, auditable rules.

Split

The operation of converting $1.00 collateral into 1 Yes token + 1 No token. Used to enter a prediction market without taking a directional position. Inverse of Merge.

T
Taker (Order)

A market order that fills existing limit orders in the orderbook. Takers remove liquidity from the CLOB. On Pots Market, takers pay fees but can earn back up to 50% in rebates based on trading tier.

Taker Rebate

A partial refund of taker fees based on 30-day weighted volume. Six tiers: Bronze (3%) through Obsidian (50%). Paid daily in pUSD. Volume on Pots Market syncs with Polymarket tier progression.

Y

The two ERC1155 outcome tokens produced by every prediction market. Yes price + No price = $1.00 always. Price = implied probability. At resolution, winning tokens pay $1.00; losing tokens pay $0.

FAQ

Common Questions

Frequently Asked Questions

01 What is the most important term to understand first?
Start with Yes + No = $1.00 — the fundamental rule of all binary prediction market tokens. Everything else builds from this: price = probability, token operations, and settlement mechanics.
02 What is the difference between IBS and POTS?
IBS is the algorithmic monetary token of Pots Money — elastic supply, backed by ≥$1 LP collateral per unit, used for bonding and staking. POTS is the fixed-supply governance token (21M total) of the prediction market layer, earned through the PBM deflation auction.
03 What does non-custodial mean in practice?
Your assets stay in your wallet at all times. When you place an order on Pots Market, you sign it with your private key using EIP-712. The operator routes the order but cannot access, modify, or hold your funds.
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