verex

Negative-Risk (Multi-Outcome) Markets

Goal: support capital-efficient multi-outcome events (only one outcome wins) via the negative-risk mechanism — relating positions across all outcomes through a conversion op.

Builds on Verex’s existing Polymarket CTF backbone — adopts Polymarket’s Neg Risk Adapter

• Neg Risk CTF Exchange rather than re-inventing them.

Scope note: neg risk applies to mutually exclusive events only. For the wider question of which event types force the outcome probabilities to sum to 100% — and the nested / multi-winner groups where they legitimately don’t — see market-groups.md.

Why

Verex currently does binary YES/NO markets. For an N-outcome event (e.g. “Who wins the election?”), independent binary markets are capital-inefficient: buying one outcome’s No has no relationship to the others. Negative risk makes “bet against A” ≡ “bet for all others.”

How it works (Polymarket model)

• A No share in any market → convertible into 1 Yes share in every other market in the event.
• The conversion is atomic, through the Neg Risk Adapter contract (over the CTF stack): hold 1 No(A) → call convert → receive 1 Yes for every other outcome.
• Neg-risk events use different contracts (Neg Risk Adapter + Neg Risk CTF Exchange).
• Orders set negRisk: true in the order options (SDK/CLI), and the API exposes a negRisk boolean on events/markets.

Augmented negative risk (outcomes can emerge later)

For races where new outcomes appear after launch (e.g. a new candidate):

• Named outcomes (known) · Placeholder slots (clarified later via a bulletin board) · Explicit “Other” (catches anything unnamed).
• Trading rule: only trade named outcomes; ignore placeholders until named; the “Other” definition narrows as placeholders are assigned — don’t trade it directly.
• Flags: enableNegRisk: true + negRiskAugmented: true; SDK option is always negRisk: true.

Adaptation to Verex

• Contracts: import Polymarket’s Neg Risk Adapter + Neg Risk CTF Exchange (like the existing ctf-exchange submodule).
• SDK/CLI: add the negRisk order option to sign/fill; expose a convert command.
• API/indexer: surface negRisk on markets/events; index conversion events.
• Web: multi-outcome market UI.

Open questions

• Standard neg risk only, or augmented (placeholders) too?
• Roadmap placement — needs the v2 CTF backbone stable first (post-S2).
• Condition/questionId design for multi-outcome vs binary.

Features

• Neg Risk contracts — import the Neg Risk Adapter + Neg Risk CTF Exchange
• Conversion op — No(A) → Yes(every other outcome), atomic via the adapter
• Multi-outcome market creation — N-outcome events on the CTF stack
• SDK/CLI negRisk support — order option + a convert command
• API / web — negRisk flag + multi-outcome UI
• Augmented neg risk (optional) — named / placeholder / Other + bulletin-board clarification
• (you) Decide standard vs augmented; roadmap placement

Resources

• Neg Risk Adapter: https://github.com/Polymarket/neg-risk-ctf-adapter
• Polymarket docs — Negative Risk Markets (pasted reference)