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While Ascend markets trade continuously like perpetuals, many prediction markets are tied to real-world events that eventually resolve. When an event outcome becomes known, the market settles and all positions are finalized. Settlement is deterministic, transparent, and rule-based. The same inputs always produce the same outcomes.

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How Resolution Works

When an underlying event resolves:
  1. The final outcome is determined using predefined resolution criteria
  2. The resolved outcome establishes the final probability price
  3. All open positions settle at that price
  4. PnL is calculated and applied to trader balances
Example: Market: “Will Apple beat Q2 earnings?”
  • Apple reports Q2 earnings and misses estimates
  • Resolution source confirms: NO
  • Final probability price: 0% (the outcome did not happen)
  • All LONG positions settle at 0%
  • All SHORT positions settle at 0%
LONGs who bought at higher prices lose. SHORTs who sold at higher prices win.

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Resolution Sources

Each market defines its resolution sources at creation. These are the authorities that determine the final outcome.
Government announcements, regulatory filings, official results.Examples:
  • Federal Reserve press releases for rate decisions
  • State election boards for election results
  • SEC filings for corporate events
These are considered highest reliability.

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Resolution Criteria

Resolution criteria are defined at market creation and cannot be changed. They specify exactly what outcome maps to what settlement price. Example: Binary event market Market: “Will BTC be above $100k on Dec 31?”
OutcomeSettlement Price
BTC closes above $100,000100%
BTC closes at or below $100,0000%
Example: Multi-outcome market Market: “Who wins the 2028 presidential election?”
OutcomeSettlement Price
Candidate A wins100% for A, 0% for others
Candidate B wins100% for B, 0% for others
Candidate C wins100% for C, 0% for others
Only one outcome settles at 100%. All others settle at 0%.

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Settlement Process

When resolution occurs:
1

Resolution triggered

The resolution source confirms the outcome. This may happen immediately (election called) or after a delay (official certification).
2

Final price set

The settlement price is set based on resolution criteria. For binary markets, this is 0% or 100%.
3

Positions settled

All open positions are closed at the settlement price. PnL is calculated using entry price vs settlement price.
4

Balances updated

Final PnL is applied to trader balances. Margin is released. The market transitions to settled state.

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Settlement PnL Calculation

At settlement, your PnL is: 
Settlement PnL = Direction × Position Size × (Settlement Price − Entry Price)
Example: LONG position, outcome happens
  • Entry Price: 55%
  • Settlement Price: 100% (outcome happened)
  • Position Size: 1,000 USDC
  • Direction: LONG (+1)
PnL = +1 × 1,000 × (1.00 − 0.55)
    = 1,000 × 0.45
    = +450 USDC
You profit 450 USDC. Example: LONG position, outcome does not happen
  • Entry Price: 55%
  • Settlement Price: 0% (outcome did not happen)
  • Position Size: 1,000 USDC
  • Direction: LONG (+1)
PnL = +1 × 1,000 × (0.00 − 0.55)
    = 1,000 × (−0.55)
    = −550 USDC
You lose 550 USDC.

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Exiting Before Settlement

You do not have to hold until settlement. You can close your position at any time before resolution. Why exit early:
  • Lock in profits if the price has moved in your favor
  • Cut losses if conviction has changed
  • Free up margin for other trades
  • Avoid settlement uncertainty
Example: You went LONG at 55%. Price rises to 72% as the event approaches. You can:
  • Hold until settlement and hope for 100%
  • Close now and take the 17 point profit
If you close at 72%, your PnL is locked in regardless of the final outcome.

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What Happens After Settlement

Once a market settles:
  • All positions are closed
  • No new positions can be opened
  • Historical data remains available
  • The market is archived
Settled markets serve as a permanent record of the outcome and trading activity.

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Edge Cases

Resolution criteria are designed to avoid ambiguity. If an edge case occurs that criteria do not clearly address, the market may use a fallback resolution mechanism defined at creation.Example: A market on “Will X happen by Dec 31?” might specify that the resolution source’s timezone is UTC, eliminating ambiguity.
Some events take time to resolve (recounts, appeals, verification). Markets remain open for trading until official resolution. Prices may converge toward the expected outcome during this period.
In rare cases, a market may be voided if the underlying event is canceled or resolution becomes impossible. Voided markets return all traders to their entry state. No profit or loss is realized.Example: An election market where the election is postponed indefinitely.

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Resolution Timeline

PhaseWhat Happens
TradingMarket is open. Positions can be opened and closed. Prices fluctuate.
Pending ResolutionEvent has occurred. Awaiting official confirmation. Trading may continue.
ResolutionOutcome confirmed. Settlement price set.
SettlementPositions closed. PnL applied. Margin released.
ArchivedMarket closed permanently. Data preserved.

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Deterministic Settlement

Settlement on Ascend is fully deterministic:
  • The same resolution input always produces the same settlement price
  • The same position always produces the same PnL
  • No discretionary intervention is required
  • All calculations are transparent and verifiable
This ensures fairness and predictability for all participants.

Next: Edge Cases

Learn how the system handles extreme conditions