Auction Markets

Overview

Auctions power Sapience's primary system for conditional predictions. They enable you to combine multiple prediction outcomes into a single parlay and trade them through a short-lived RFQ-style matching process.

Parlays let you express multi-condition forecasts. Example: "Team A wins AND turnout ≥ 60%." If every condition resolves as predicted, the parlay wins; one incorrect leg loses the entire position.

• Why parlays? Higher potential payout for compound forecasts, simple win/lose outcome, and expressive predictions beyond a single market.
• Probability intuition: When outcomes are independent, the parlay's implied probability is the product of individual probabilities — hence lower combined probability and higher potential payoff.

How Auctions Work

Auctions use an RFQ (Request-for-Quote) model:

1. Taker starts an auction by announcing their parlay (predicted outcomes + wager) to the relayer
2. Makers submit competing bids with their desired wager amounts and signed quotes
3. Maker selects the best bid (typically highest wager among non-expired quotes)
4. The taker transfers collateral and mints NFTs for both the taker and maker (the parlay and anti-parlay)
5. After the verifier smart contract is able to settle the wager, the NFTs can be burned and the winner receives the collateral.