Invalid / Void Market
Definition
A market resolved as invalid (or void) when criteria are ambiguous or unmet; funds are returned per platform policy.
When Markets Go Invalid
Ambiguous Criteria
- Question wording is unclear
- Resolution source undefined or inaccessible
- Multiple interpretations possible
- Conflicting official sources
Unmet Conditions
- Event never occurs (e.g., election canceled)
- Data source discontinued
- Deadline passes without resolution
- Force majeure events
Technical Issues
- Smart contract bugs
- Oracle failures
- Platform errors
- Data feed problems
Platform Policies
Polymarket
- May include explicit "Invalid" outcome token
- Community can dispute resolutions via UMA
- Invalid outcome pays holders proportionally
- Some markets auto-resolve to invalid if conditions not met
Kalshi
- Markets may be voided pre-event
- Trades reversed, funds returned
- Clear criteria in contract specifications
- CFTC oversight on dispute handling
Other Platforms
- Policies vary by platform
- Check terms of service
- Some refund all traders
- Some allow trading on "Invalid" as an outcome
Examples
Example 1: Canceled Event
Market: "Will the election happen on November 5?"
Issue: Election postponed due to emergency
Resolution: Market declared invalid, all funds returned
Example 2: Ambiguous Question
Market: "Will the economy improve in 2024?"
Issue: No clear definition of "improve"
Resolution: Market invalid due to subjective criteria
Example 3: Missing Data
Market: "Will Stock X close above $100?"
Issue: Stock delisted before resolution date
Resolution: Market invalid, no clear resolution possible
How to Avoid
As a Market Creator
- Use precise, unambiguous language
- Specify exact resolution sources
- Define contingency scenarios
- Test criteria for edge cases
As a Trader
- Read resolution criteria carefully
- Check if source is reliable
- Consider "Invalid" risk in pricing
- Avoid markets with subjective criteria
Financial Impact
Refund Scenarios
Most platforms handle invalid markets by:
- Refunding all participants
- Returning funds to original traders
- No winners or losers
"Invalid" as Tradable Outcome
Some platforms let you trade "Invalid":
- Buy "Invalid" if you think criteria are bad
- Pays if market resolves invalid
- Hedge against ambiguous markets