Frequently Asked Questions

Draft — this FAQ is a work in progress and will change. Do not treat answers as final.

This page collects the questions traders ask most often about Proof, with short answers and a pointer to the doc that covers each topic in full. It is conceptual — there are no endpoints, payloads, or code here. All worked numbers below are illustrative.

The basics

What is a conditional market?

A conditional market lets you trade an asset conditioned on whether a real-world event happens, alongside a market on the event's probability itself. One underlying asset and one binary event produce a linked family of five order books: the underlying perpetual, a conditional perpetual (YES) and conditional perpetual (NO), and a prediction binary (YES) and prediction binary (NO). Together these split a single asset's value into a probability and a pair of outcome-conditional prices — see What You Can Trade and Market Structure & Instruments.

What is a conditional perpetual, exactly?

A conditional perpetual is a perpetual on an asset that only fires if its branch of the event wins. While the event is open it trades like an ordinary perp — its own order book, its own price, its own leverage. At resolution it either cash-settles to the underlying (if its branch wins) or voids (if its branch loses or the event is unresolvable) — see What You Can Trade.

How is a conditional perpetual different from a prediction binary?

A prediction binary pays for whether an event happens — a fixed $1 if its outcome wins and $0 if it loses, no matter how far the asset moved. A conditional perpetual pays for how much the asset moves in the world where the event fires: it settles to the underlying's mark, so a bigger move means a bigger payoff. The binary captures the probability; the conditional perpetual captures the magnitude — see What You Can Trade and Probability & Implied Markets.

Resolution and void

What happens if the event doesn't go my way?

If you hold a conditional perpetual and its branch loses — the other outcome wins, or the event is declared unresolvable — the position voids: your profit-and-loss is zero and your margin is returned (net of any fees accrued while the leg was open). This is the single most important property of conditional markets, and the most misunderstood: a losing conditional perpetual is not a loss, and it does not settle to $0. It simply disappears and you walk away flat on that leg — see Settlement, Resolution & Void.

For example, if you are long the YES conditional perpetual bought at an illustrative $108 and the event resolves NO, you do not lose $108 — the position voids, P&L zero, margin back. (A prediction binary behaves differently: a directly-bought binary that loses forfeits its premium — see below.)

What happens to my position at resolution, and do I need to act?

When the event resolves, all five books in the family settle atomically, in a single step. The winning conditional perpetual cash-settles at the underlying's mark; the losing one voids (P&L zero, margin returned); the winning binary pays $1 and the loser pays $0. You should manage your position before resolution rather than relying on the settlement: the conditional legs freeze ahead of the deadline, and just after settlement the normal risk sweep runs in the same block — so plan to flatten or fully box your position before the freeze, not at it — see Settlement, Resolution & Void.

I was right about the event but wrong about the size — what was my best instrument?

If you correctly called the outcome but the asset's move was smaller than you expected, a prediction binary would still have paid you the full $1 — it pays for whether, not how much. A conditional perpetual instead pays the realized magnitude of the move, so a modest move means a modest gain. Picking between them is exactly the probability-vs-magnitude choice the family is built to express — see What You Can Trade and Probability & Implied Markets.

Does YES + NO always equal $1?

For the two prediction binaries, their prices sum to about a dollar — BY + BN ≈ $1 — while the event is open, because at a YES or NO resolution exactly one of them pays $1 and the other pays $0. The exception is a Void: if the event is declared unresolvable, both binaries pay $0, so the pair sums to $0 rather than $1. So read the binary box as holding through a YES/NO resolution and breaking to zero through a Void — see Settlement, Resolution & Void and Probability & Implied Markets.

Exiting and value

Can I exit a conditional perpetual before the event resolves?

Yes. You don't have to wait for resolution. Closing a conditional perpetual early does not pay cash directly, though — it crystallizes your realized conditional profit-and-loss into prediction-binary tokens entered at $0 (a long of the firing branch if you closed at a gain, a short if you closed at a loss). You then sell those tokens on the prediction-binary book at the going quote to get cash today, or hold them to resolution. If you already hold the opposing binary, closing realizes cash directly. Very small amounts (sub-dollar P&L) round to zero — see Settlement, Resolution & Void.

For example, closing a profitable YES conditional perpetual might mint you 100 long YES tokens at $0 entry; if the YES binary trades at an illustrative $0.62, selling them returns about $62 now.

Why isn't my conditional gain withdrawable cash yet?

An unrealized gain on a conditional perpetual is a branch-contingent claim: "up $5 on the YES leg" really means "a $5 claim if the event resolves YES, and nothing if it resolves NO." That value lives entirely inside one branch's world and can't be handed to you as unconditional cash before resolution, because the claim ceases to exist if the other branch wins. To realize it early you close the leg and sell the resulting binary tokens on the binary book — the close-then-sell pairing is the cash-out path — see Settlement, Resolution & Void.

Leverage, margin, and liquidation

Do conditional perpetuals have leverage?

Yes. Like the underlying perpetual, each conditional perpetual carries leverage: it has its own initial-margin (IM) and maintenance-margin (MM) requirements (both positive, with MM ≤ IM) and is margined as a perpetual in the branch where it fires. The binding check across your whole account is a worst-case scenario test, not a per-leg sum — see Cross-Margin & the Scenario-Margin Model and Conditional-Market Margin.

What triggers liquidation?

An account is liquidated when its equity falls below its maintenance margin — and the trigger is worst-case, evaluated across the full range of resolution outcomes your positions are exposed to, not a single current-mark number. Liquidation first cancels your resting orders and re-checks, because freeing the margin those orders reserve can bring you back above the line; if you're still under, positions are closed at the oracle reference mark rather than swept into the book — see Liquidation & Backstops.

Why do I see two different prices or marks for the same market?

By design, the engine keeps two distinct marks: a risk mark, taken from the oracle, that drives your margin, equity, unrealized P&L, liquidation, and settlement; and a funding mark, taken from the order book's own moving average, that drives funding alone. They can diverge — that gap is exactly what funding measures. Separately, a conditional perpetual's own book price (its conditional forward) is a display reference; its risk mark is the underlying's oracle, since that's what its winning branch settles to — see Oracles & Mark Prices.

Costs

What are the fees?

Proof charges a flat per-fill fee of 5 basis points on the taker side and 2 basis points on the maker side, identical across every market kind — perpetuals, conditional perpetuals, and prediction binaries. The maker side is a charge, not a rebate. Fees are taken in your account's collateral currency, per fill, on the fill's notional, and they reduce your realized P&L — see How Trading Works and Market Structure & Instruments.

Is funding a fee?

No. Funding is a periodic payment that flows directly between longs and shorts to tether a perpetual's price to its underlying — it is zero-sum and the exchange takes no cut, so it is not a fee. It also applies to perpetuals only: the entire conditional family (both conditional perpetuals and both prediction binaries) never accrues funding — see Funding.

Pricing concepts

What does "p" mean?

p is the probability that the event resolves YES. In a coherent family it equals the YES prediction binary's price (p ≈ BY), and it can also be backed out of the two conditional perpetual prices, giving you a second, independent read to cross-check. It's the weight that ties the family together: the underlying forward is the probability-weighted blend of the two conditional prices, F = p·CY + (1 − p)·CN — see Pricing I — The Conditional-Expectation Framework and Probability & Implied Markets.

More

For the full picture, start with What Proof Is and What You Can Trade, then follow the cross-references above into the topic you need. The complete list of terms and symbols is in Glossary & Notation.