Negative Risk Markets
Capital-efficient trading for multi-outcome events.
Negative Risk (NegRisk) is a mechanism for multi-outcome events where only one outcome can win. It enables capital-efficient trading by linking all outcomes within an event together.
How It Works
In a standard multi-outcome event, each market is independent. If you want to bet against one outcome, you'd need to buy that outcome's No tokens — but those No tokens have no relationship to the other outcomes.
Negative risk changes this. In a neg risk event, a No share in any market can be converted into 1 Yes share in every other market in that event.
Example
Consider "Who will win the 2024 Presidential Election?" with three outcomes:
Before conversion — You hold 1 No on "Other":
| Outcome | Position |
|---|---|
| Trump | — |
| Harris | — |
| Other | 1 No |
After conversion — That 1 No converts into Yes shares for every other outcome:
| Outcome | Position |
|---|---|
| Trump | 1 Yes |
| Harris | 1 Yes |
| Other | — |
Betting against one outcome is economically equivalent to betting for all other outcomes. This means you need less collateral to express the same view.
Doji handles negative risk automatically. When you trade on a NegRisk-enabled market, the correct flags are set behind the scenes — you don't need to do anything special.
What This Means for You
- Lower collateral — You don't need to separately fund positions across multiple markets in the same event.
- Linked pricing — Prices across all outcomes in a neg risk event are mathematically related.
- Grouped view — Doji displays all related neg risk markets for a single event together in one interface.
Augmented Negative Risk
Some events use augmented negative risk, where new outcomes can be added after trading begins (e.g., a new candidate enters a race). These events include:
- Named outcomes — Known options like "Trump" or "Harris".
- Placeholder outcomes — Reserved slots that get clarified later as new outcomes emerge.
- "Other" — Catches any outcome not explicitly named.
Only trade on named outcomes. Placeholder outcomes should be ignored until they are clarified. If the winning outcome was never named, the market resolves to "Other."