Mechanism · CO
Continuous / Distribution Markets
Trader expresses a full probability distribution (or precise point) over a numerical outcome; payoff is proximity-based. Genuine outcome-shape pricing rather than picking a side.
Also known as: Distribution markets · Continuous prediction markets · CFAMM markets · Curve markets
In plain terms
Instead of betting 'will BTC close above $100k?', you sketch the whole curve of where you think BTC will land · and get paid by how close your curve was to the truth.
How it works
Constant-function AMM whose state IS a probability density. Trader inputs a curve shape (Gaussian μ, σ); the AMM rebalances to absorb that distributional view. At resolution the payout scales by L2-norm proximity to the realized value rather than winner-takes-all.
How to identify it
User input is a shape (range + dispersion), not a side. Payoff varies smoothly with distance from realized outcome. Single market replaces a strike ladder.
Common confusion
Often confused with scalar markets · but scalar markets pick a single point on a scalar and pay linearly; distribution markets accept a full distribution and pay by proximity to the integral. Also confused with scalar perps (Ventuals) which share continuous underlyings but use perp economics, not PM AMM economics.
Platforms in this category (2)
- Dekant · The first continuous-outcome prediction market on Solana · draw a curve, get paid by how close you call it.
- Trepa · Solana precision-forecasting platform: slider-set numerical guesses with convex proximity-based payoffs
Key references
- Distribution Markets · Dave White (Paradigm) · Dec 2024
- Self-Financed Wagering Mechanisms for Forecasting · Lambert, Langford, Wortman, Chen, Reeves, Shoham, Pennock · 2008
- From prediction markets to info finance · Vitalik Buterin · Nov 2024