> ## Documentation Index
> Fetch the complete documentation index at: https://dexbuilder.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Prices & Order Book

> Understand how prices are formed in Prediction Markets and how the CLOB supports peer-to-peer trading.

Prediction Markets use a Central Limit Order Book (CLOB). Prices are not set directly by the platform; they are formed by supply and demand between users placing buy and sell orders.

![Image](https://mintcdn.com/dexbuilder/HmQKrNhFx36mwspk/images/image-2.png?fit=max\&auto=format\&n=HmQKrNhFx36mwspk\&q=85\&s=6dfc5307fb45d09908317e5c17aa7c85)

## Price Represents Probability

Each outcome share is priced between `$0.00` and `$1.00`, which can be interpreted directly as the market's estimated probability of that outcome.

The displayed price is typically the midpoint between the best bid and best ask. When the bid-ask spread is too wide, the most recent trade price may be used instead.

| Price | Implied Probability |
| - | - |
| `$0.25` | 25% |
| `$0.50` | 50% |
| `$0.75` | 75% |

### Example

If the best bid for Yes is `$0.34` and the best ask is `$0.40`:

```text theme={null}
Displayed Price = ($0.34 + $0.40) / 2 = $0.37
Implied probability ≈ 37%
```

## Order Book

The order book contains all currently unfilled buy and sell orders for the Market:

| Side | Description |
| - | - |
| Bids | Buy orders showing the prices buyers are willing to pay, with the highest bid first |
| Asks | Sell orders showing the prices sellers are willing to accept, with the lowest ask first |

The difference between the best bid and best ask is called the Spread. A narrower spread generally indicates better market liquidity.

## Order Types

### Market-Style Trading

When you want immediate execution, you can submit an order that directly consumes available order-book liquidity:

* Buy: begins filling against the lowest available ask.
* Sell: begins filling against the highest available bid.

### Limit Orders

A limit order only executes at the specified price or a better price:

* the unfilled portion remains on the order book;
* a single order can be partially filled multiple times;
* the unfilled remainder can be cancelled when cancellation is allowed.

## Matching and Settlement

The Prediction Markets CLOB uses a hybrid architecture:

1. **Off-chain matching**: the matching service matches orders whose prices and quantities satisfy execution conditions.
2. **On-chain settlement**: matched trades settle asset delivery through smart contracts.

This model combines the efficiency of off-chain matching with the verifiability of on-chain asset settlement.

## Next Steps

> [card] [Order Lifecycle](https://dexbuilder.mintlify.site/en/event-markets/order-lifecycle.md)
>
> Learn the complete flow from order submission and matching through settlement.

> [card] [Positions & Outcome Tokens](https://dexbuilder.mintlify.site/en/event-markets/positions-tokens.md)
>
> Learn how outcome tokens represent user positions.


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