Outcome Specification

1. Outcome Token Standard

Solana port of the Polymarket binary-outcome ERC-1155 pattern.

• One Token-2022 mint per outcome. A binary market has 2 mints (YES, NO); an N-outcome election market has up to 16.
• mint_authority = PDA(b"market", market_id). The program is the only account that can mint or burn.
• Transfer extension: TransferFeeConfig is off for outcome shares (so retail flow stays free) but on for $WAGR slashing flows.
• Decimals match the collateral mint (USDC -> 6).

Account Layout

pub struct OutcomeMarket {
    pub market_id: u64,
    pub authority: Pubkey,            // governance / migration authority
    pub question: String,             // <= 256 bytes
    pub outcome_count: u8,            // 2..=16
    pub resolution_deadline: i64,
    pub state: MarketState,
    pub collateral_mint: Pubkey,
    pub collateral_vault: Pubkey,
    pub lmsr_b: u128,
    pub fee_bps: u16,
    pub total_volume: u64,
    pub created_at: i64,
    pub resolution_source: ResolutionSource,
    pub proposed_outcome: u8,
    pub proposed_at: i64,
    pub proposer: Pubkey,
    pub winning_outcome: u8,
    pub shares_q: [u128; 16],         // LMSR share vector
    pub bump: u8,
}

2. Conditional Token Framework

Three operations, all implemented in wagr-outcome-engine::ctf and exposed by the Anchor program. Pure logic crate so simulation, CLI dry-runs, and on-chain execution share the rule set verbatim.

split

collateral_in = amount
shares_out[i] = amount   for i in 0..outcome_count
fee_taken     = amount * fee_bps / 10_000

After a split, the holder holds one outcome share of every outcome. The merge invariant guarantees they can always reclaim amount of collateral by burning one share of each.

merge

require holder.shares[i] >= amount   for every i
burn  amount of each outcome
unlock amount of collateral to holder

redeem

After resolution, only the winning outcome can be redeemed for collateral.

let winner = market.winning_outcome
let payout = holder.shares[winner]
burn payout shares of winner
transfer payout collateral

Losing outcomes are not refunded. The collateral that backed them stays in the vault and either funds the buyback or is paid out to the winner side that was over-staked.

3. LMSR Pricing

C(q) = b * ln( Sum exp(q_i / b) )
p_i  = exp(q_i / b) / Sum exp(q_j / b)

• bis fixed per market and bounds the AMM's worst-case loss at b · ln(N).
• Numerical stability: implemented with the standard logsumexp trick.
• A trader paying Δ shares of outcome i pays C(q + Δe_i) - C(q) collateral.

4. Multi-Outcome Markets

Binary YES/NO is the default. Setting outcome_count > 2 extends the model:

• The LMSR q vector stretches to outcome_count entries.
• Prices remain a probability simplex (Σ p_i = 1).
• A multi-outcome election market resolves to one canonical index; tournament-style markets are encoded with a "no winner" outcome slot (outcome_count + 1 slot reserved as 0xFF, redirected through MarketState::ResolvedInvalid).

5. Fee Flow

flowchart LR
    Trade((Trade)) -->|fee_bps| Vault[Fee Vault]
    Vault -->|50%| Buyback[$WAGR Buyback]
    Buyback --> Burn[Burn]
    Vault -->|50%| Treasury[Treasury]

Half of every fee buys $WAGR on the open market and burns it. The other half funds the treasury (oracle bonds, frontend reliability, marketing).