Glossary

Conditionals

Conditionals are event futures whose payout depends on the value of an asset or index conditional on the outcome of a specific event. Each conditional on Butter is defined by an event–asset pair, such as BTCUSD conditional on a particular Fed decision. See What are conditionals? for more background.

Collateral token

The collateral token is the asset traders deposit to open and maintain positions in conditionals. On Butter, collateral is USDC. See Getting started for how deposits work in the app.

Conditional market

A conditional market is the set of branches that trade the future price of a given asset for all outcomes of a specific event. For a single event–asset pair, the conditional includes one branch per mutually exclusive outcome, such as BTCUSD if the Fed hikes, holds, or cuts. See How it works.

Event

An event is a real-world situation or decision with a predefined set of outcomes, such as a central-bank meeting, macroeconomic print, earnings release, governance vote, or regulatory ruling. Each event defines a set of mutually exclusive outcomes, each linked to its own branch in the conditional market. See What are conditionals?.

Branch

A branch is the market on an asset’s price conditional on one specific outcome of an event. For example, “BTCUSD if the Fed hikes” and “BTCUSD if the Fed cuts” are two different branches in the same conditional, and only the branch whose outcome occurs settles to a nonzero value. See How to forecast for how to think about branch prices.

Conditional USDC

Conditional USDC represents how much USDC you have available to trade in a specific branch. Conditional USDC in the realized branch is redeemable for actual USDC at settlement, while conditional USDC in unrealized branches expires worthless. When you open a position in a branch, you receive conditional USDC in all other branches for the same event, which you can then use to trade in those branches. See Conditional tokens.

Branch price

The branch price is the market-implied future price of the asset in a given branch, conditional on that branch’s outcome occurring. It reflects what traders collectively believe the asset’s price will be if that outcome happens and is the price used to compute position values in that branch. See How to forecast.

Settlement

Settlement is the process of resolving a conditional market, posting the settlement price for the realized branch, updating token values, and enabling users to redeem positions for collateral. Branches linked to unrealized outcomes become worthless, while the realized branch settles to its settlement price. See the “Exit and settle” section in Getting started.

Expiry date

The expiry date is the latest timestamp by which a conditional stops trading and moves into settlement. If the event occurs before the expiry date, the market closes and settles shortly after the event once the reference price is observed. If the event has not occurred by the expiry date, the market still closes and settles based on the rules defined for that event. See How to forecast for how settlement timing affects pricing.

Oracle

The oracle is the on-chain service that reports the final asset price used to settle a branch, as well as which branch is realized. Butter uses Reality.eth to report this settlement data. See the references in Why conditionals?.

Settlement price

The settlement price is the asset price for a branch that the oracle reports at settlement and that determines how much collateral long and short positions in the realized branch can be redeemed for. It is the price level that all positions in that branch settle against. See Scalar tokens.

Forecasted impact

Forecasted impact describes how much the market expects an event to move an asset’s price. It looks at price differences between branches for the same event–asset pair and expresses those differences as a percentage of the asset’s current spot price. See How to forecast.

Spread

Spread reflects the percentage difference between an asset's price in a given branch, and its spot price. This reflects how the market expects the asset's price to change, were this branch's outcome to be realized. See How to forecast.

Position

A position is a trader’s net long or short exposure in a specific branch of a conditional market. For example, holding a long position in the “ETHUSD if earnings beat” branch means your P&L depends on the ETHUSD settlement price if that branch’s outcome occurs. See Getting started.

Size

Size is the amount of underlying exposure a position represents, expressed in asset units within a branch. A long position with size of 0.5 BTC in a given branch means the position is long 0.5 BTC conditional on that branch’s outcome occurring. See Leverage and exposure.

Position value

Position value is the notional value of a position, equal to its size multiplied by the branch price. A position with size 0.5 BTC in a branch with a branch price of 60,000 USD has a position value of 30,000 USD. See Leverage and exposure.

Collateral

Collateral is the amount of conditional USDC locked to support a given position. It equals the value of the long or short tokens that constitute the position and represents how much conditional capital the position is using, which is different to the position’s notional value. See Leverage and exposure.

Bounds

Bounds are the lower and upper price levels that define the scalar payoff range for long and short tokens in a branch. The lower bound is the minimum asset price the scalar market is designed to cover, and the upper bound is the maximum price. Inside this interval, long and short token payoffs change linearly with the asset price, while outside it their payoffs are clamped so that one side pays 1 USDC and the other pays 0. Bounds are the same for all branches of a given event–asset pair and are fixed when the market is created. See Scalar tokens.

Scalar-to-asset ratio

The scalar-to-asset ratio is the number of scalar tokens required to obtain one unit of asset exposure in a branch. It equals the width of the scalar bounds expressed in price units, so for bounds between 60,000 USD and 110,000 USD on BTCUSD, the ratio is 50,000 long/short tokens required per 1 BTC of exposure. See Scalar tokens.

Leverage

Leverage is the ratio of a position’s notional value to the conditional USDC required as collateral. It depends on both the scalar bounds and the current conditional price in the branch and describes how much price exposure you obtain per unit of conditional USDC committed to the position. See Leverage and exposure.

Long and short tokens

Long and short tokens are fungible claims on the settlement price within a branch of a conditional market. They are created in matched pairs from collateral, give linear exposure between predefined lower and upper bounds for the asset’s price at settlement, and in unrealized branches both sides expire worthless. See Scalar tokens.