#Definition
The Market Lifecycle describes the sequential stages a prediction market passes through from its initial creation to final settlement and closure. Understanding these stages helps traders know when they can trade, when positions lock, and when payouts occur.
#The Five-Stage Lifecycle
#The Five-Stage Lifecycle
#Stage 1: Created
Status: Market exists but may not be tradeable yet
Characteristics:
- Rules and resolution criteria defined
- Outcomes specified
- Timeline set (close date, resolution date)
- Initial liquidity may be added
- Not yet accepting trades (or pre-trading period)
Duration: Minutes to days before opening
Example:
Dec 1: Market created for "Will Fed raise rates in Dec meeting?"
Dec 2: Initial liquidity added
Dec 3: Market opens for trading
Trader actions:
- Review rules carefully
- Research the event
- Prepare trading strategy
- Set alerts for opening
#Stage 2: Open
Status: Active trading
Characteristics:
- ✅ Can buy shares
- ✅ Can sell shares
- ✅ Prices fluctuate based on trading
- ✅ Liquidity available
- ✅ New information drives price changes
- ⏳ Event hasn't occurred yet (or is in progress)
Duration: Hours to months (most common: weeks to months)
Example:
"Will Bitcoin reach $100k in 2025?"
Opens: Jan 1, 2025
Closes: Dec 31, 2025 23:59 UTC
Open period: 365 days
Trader actions:
- Active trading
- Monitor news and information
- Adjust positions
- Take profits or cut losses
- Manage risk exposure
Price dynamics during Open:
Early (weeks from close): Wide uncertainty, volatile
Mid (days from close): Narrowing range, more information
Late (hours from close): Converging to outcome, high confidence
#Stage 3: Closed
Status: Trading stopped, awaiting outcome
Characteristics:
- ❌ Cannot trade
- ❌ Positions frozen
- ❌ Cannot add/remove liquidity
- ⏳ Outcome may or may not be known
- 🔍 Platform/oracle gathering resolution data
- ⏱️ Dispute window (on some platforms)
Duration: Minutes to weeks (typically hours to days)
Example:
Election market:
Closes: 8 PM ET Tuesday (polls close)
Resolution source gathers data: Tuesday night
Expected resolution: Wednesday morning
Closed period: ~12-16 hours
Why this stage exists:
- Prevents manipulation during outcome determination
- Allows verification of results
- Provides dispute/challenge window
- Ensures fair, orderly resolution
Trader actions:
- Monitor event outcome
- Await resolution
- Prepare dispute if outcome seems wrong
- Calculate expected payouts
- Cannot modify positions
#Stage 4: Resolved
Status: Outcome determined, payouts pending
Characteristics:
- ✅ Winning outcome declared
- ✅ Oracle/platform has made decision
- ⏳ Payouts being processed
- 🔍 Final verification/dispute period may apply
- ❌ Still cannot trade
Duration: Minutes to days (usually hours)
Example:
Sports market:
Closes: End of game (9:45 PM)
Officials confirm score: 10:00 PM
Resolution: Team A wins
Settlement processing: 10:15 PM
Resolved period: 30 minutes
Substates:
- Proposed resolution: Outcome suggested, can be disputed
- Final resolution: Dispute period passed or dispute resolved
- Settlement pending: Payouts being distributed
Trader actions:
- Verify outcome is correct
- File dispute if error
- Await payout
- Review performance
#Stage 5: Settled
Status: Complete, final, permanent
Characteristics:
- ✅ Payouts distributed
- ✅ Winners received $1.00 per share
- ✅ Losers received $0.00
- 🔒 Market permanently closed
- 📊 Historical data preserved
- ❌ Cannot reopen (except in case of error)
Duration: Permanent
Example:
Wednesday 10:00 AM: Payouts sent → SETTLED
Market now permanently closed
Record preserved for analysis
Trader actions:
- Confirm receipt of funds
- Withdraw or reinvest
- Update tax records
- Review what you learned
- Analyze accuracy of your predictions
#Stage Transitions
#Normal Progression
Created (setup)
↓ [Market opens]
Open (trading active)
↓ [Close time reached]
Closed (positions frozen)
↓ [Outcome determined]
Resolved (winner declared)
↓ [Payouts processed]
Settled (complete)
#Alternative Paths
Early close (rare):
Open → Emergency Close → Void → Refunds
(Market had critical error, all funds returned)
Instant settlement (very simple markets):
Open → Closed → Settled
(Resolution+settlement happen simultaneously)
Extended close (disputed outcome):
Closed → Dispute → Extended review → Resolved → Settled
(May take weeks if outcome contested)
#Duration by Market Type
#Political Markets
Created: Months before election
Open: 2-12 months
Closed: 4-48 hours (election night to call)
Resolved: Minutes to days after call
Settled: Hours after resolution
Total lifecycle: 2-12 months
#Sports Markets
Created: Days to weeks before game
Open: Days to hours
Closed: 0-10 minutes (game ends to confirmation)
Resolved: Minutes (official score)
Settled: Minutes (payouts)
Total lifecycle: Days to weeks
#Economic Data Markets
Created: Weeks before release
Open: 2-8 weeks
Closed: Days (between close and data release)
Resolved: Minutes (data released)
Settled: Hours (verification)
Total lifecycle: 2-8 weeks
#Crypto Price Markets
Created: Anytime
Open: Days to months
Closed: Instant (when price hits target OR deadline)
Resolved: Minutes (check price oracle)
Settled: Minutes to hours
Total lifecycle: Variable
#Stage-Specific Risks
#Open Stage Risks
- Information risk: New information changes probabilities
- Liquidity risk: May not be able to exit at good price
- Time decay: As event nears, probability may shift against you
- Event risk: Unexpected occurrences
- Platform risk: Technical issues during trading
#Closed Stage Risks
- Locked capital: Funds unavailable
- Extended close: Resolution delayed beyond expected
- Outcome uncertainty: Not yet clear who won
- Resolution risk: Platform may resolve incorrectly
- Dispute complications: Challenges extend timeline
#Resolved Stage Risks
- Payout delay: Settlement processing takes time
- Re-resolution: Error found, outcome reversed
- Platform insolvency: Cannot pay out (rare)
- Technical failure: Smart contract or payment issue
#Settled Stage Risks
- Tax obligations: May owe taxes on gains
- Withdrawal issues: Moving funds off platform
- Error discovery: Very rare, but outcome may be wrong
#Platform-Specific Lifecycles
#Kalshi (Centralized, Regulated)
Created: Platform staff design market
↓ (CFTC compliance review)
Open: Trading begins on scheduled date
↓ (defined contract duration)
Closed: Automated at contract expiry
↓ (minutes to hours)
Resolved: Staff verify outcome from source
↓ (minutes to hours)
Settled: Automatic payout to accounts
↓
Complete: Historical record maintained
Typical total time: Weeks to months
#Polymarket (Decentralized)
Created: User proposes market
↓ (review if required)
Open: Trading on AMM/CLOB
↓ (variable duration)
Closed: Smart contract enforced
↓ (outcome occurs)
Resolved: UMA Oracle determines outcome
↓ (2-hour dispute window)
Settled: Users redeem winning tokens for USDC
↓
Complete: On-chain record permanent
Typical total time: Weeks to months Note: Settlement requires user action (redemption)
#Manifold Markets (Play Money)
Created: Instant user creation
↓
Open: Immediate trading
↓ (creator sets duration)
Closed: Creator closes market
↓ (often simultaneous)
Resolved: Creator declares outcome
↓ (instant)
Settled: Automatic Mana distribution
↓
Complete: Record maintained
Typical total time: Days to weeks Note: Much faster, less formal
#Advanced Lifecycle Concepts
#Market Cloning
Some platforms allow "cloning":
Original market settles
→ Popular topic
→ Platform creates new market on same topic
→ New lifecycle begins
Example:
"Will Bitcoin reach $100k in 2024?" → Settles NO
"Will Bitcoin reach $100k in 2025?" → New market created
Same question, new timeline, fresh lifecycle
#Conditional Lifecycle
Markets that only activate if condition met:
Parent market: "Will Candidate A win the election?"
Child market: "If Candidate A wins, will stocks rise?"
Child lifecycle begins: Only if parent resolves YES
#Rolling Markets
Continuous markets that reset:
"Weekly Bitcoin prediction"
→ Settles every Friday
→ New market opens for next week
→ Perpetual lifecycle of weekly markets
#Lifecycle and Trading Strategy
#Long-term Holds (Open → Settled)
- Enter early, exit at settlement
- Requires confidence in outcome
- Maximum profit potential
- Highest risk (all-or-nothing)
#Swing Trading (Open → Open)
- Buy and sell during Open stage
- Profit from price fluctuations
- Exit before close
- Lower risk than holding to settlement
#Close-to-Close Arbitrage (Closed → Settled)
- Some platforms allow buying right before close
- Locks in near-certain outcome
- Low reward, very low risk
- Capital efficient
#Information Trading (Open → Open)
- React to new information
- Quick entries and exits
- High frequency
- Skill-based edge
#Monitoring Lifecycle Stages
#Trader Tools
Alerts:
- "Market opens in 1 hour"
- "Market closes in 24 hours"
- "Market resolved - outcome: YES"
- "Payout received"
Dashboards:
- Filter by stage (Open only, Closed, Settled)
- Sort by close time
- Track lifecycle transitions
Calendars:
- Close dates for all positions
- Expected resolution dates
- Settlement timelines
#The Complete Picture
Understanding the lifecycle helps traders:
✅ Know when to trade: Only during Open stage ✅ Plan exits: Before Closed stage if desired ✅ Expect delays: Closed and Resolved can take time ✅ Manage capital: Account for locked periods ✅ Avoid surprises: Know what happens at each stage ✅ Optimize strategy: Different approaches for different stages
Markets are dynamic entities that progress through predictable stages. Savvy traders understand and work within this lifecycle to maximize returns and minimize risk.