Event Contract

An event contract is a financial instrument whose payout depends on whether a specified future event occurs by a set date. Each contract resolves to a fixed value, commonly expressed as a payout of one unit if the stated condition is met and zero if it is not. The term also appears in ordinary commercial law to describe a contract for a one-time event such as a wedding or conference, a usage distinct from the financial instrument described here.

How it works

An event contract defines a question with a verifiable outcome, a resolution date, and a resolution source. Traders buy and sell shares in the possible outcomes before the event settles. The price of a share, typically between zero and one, reflects the market's collective estimate of the probability that the outcome occurs. A share priced at 0.65 implies a 65 percent implied probability.

At resolution, the contract is settled against the designated source of truth. Shares in the correct outcome pay the full fixed value, and shares in incorrect outcomes expire worthless. In onchain markets, the contract logic, collateral, and settlement are encoded in smart contracts, and an oracle or designated resolver reports the outcome that triggers payout. Collateral is held on-chain until the event resolves.

Why it matters

For institutional readers, event contracts convert discrete real-world outcomes into tradable, priced instruments, producing continuous implied-probability data on elections, economic releases, and other events. This supports hedging specific binary risks and sourcing signals that traditional markets do not express directly. Onchain venues add transparent settlement and auditable collateral, which changes how counterparty risk and resolution are evaluated. For a fuller treatment of structure and venues, see What Is an Event Contract? How Prediction Markets Work.

Related terms

• Prediction market
• Binary option
• Oracle
• Settlement
• Implied probability

Frequently asked questions

How does an event contract differ from a binary option?

Both pay a fixed amount on a yes or no outcome. Binary options usually reference market prices such as an asset level, while event contracts reference broader real-world events like elections or data releases.

What determines the outcome of an event contract?

A predefined resolution source determines the outcome. In onchain markets this is often an oracle or designated resolver that reports the result, which then triggers settlement through the contract's smart contract logic.

What does the price of an event contract share represent?

The price, typically between zero and one, represents the market's implied probability that the outcome occurs. A share priced at 0.40 implies a 40 percent estimated chance the stated condition is met.

Allium provides onchain data infrastructure. Companies named in this article may be Allium customers, prospects or commercial counterparties. The authors and other Allium personnel may hold positions in the assets discussed. This article is informational only and is not investment, legal or tax advice. Data and information last reviewed: October 19, 2026.