The combinatorial-tokens module implements modern Zeitgeist's method of creating and destroying outcome tokens.
In a categorical or scalar prediction market, one unit of a complete set (i.e. one unit of each outcome token of the market) always redeems for one unit of collateral.
In a Yes/No market, for instance, holding x units of Yes and x units of No means that, when the market resolves, you will always receive x units of collateral. In a scalar market, on the other hand, x units of Long and x units of Short will always redeem to a total of x units of collateral, as well.
This means that buying and selling collateral for complete sets should be allowed. For example, x units of collateral should fetch x units of complete set, and vice versa. Buying complete sets can be thought of as splitting collateral into outcome tokens, while selling complete sets can be thought of as merging outcome tokens back into collateral.
The combinatorial-tokens module generalizes this approach to not only allow splitting and merging into collateral, but also splitting and merging into outcome tokens of multiple different markets. This allows us to create outcome tokens that combine multiple events. They are called combinatorial tokens.
For example, splitting an A token from one categorical market using another categorical market with two outcomes X and Y yields A & X and A & Y tokens. They represent the event that A and X (resp. Y) occur. Splitting a Yes token from a binary market using a scalar market will give Yes & Long and Yes & Short tokens. They represent Long/Short tokens contingent on Yes occurring.
In addition to splitting and merging, combinatorial tokens can be redeemed if one of the markets involved in creating them has been resolved. For example, if the XY market above resolves to X, then every unit of X & A redeems for a unit of A and Y & A is worthless. If the scalar market above resolves so that Long is valued at .4 and Short at .6, then every unit of Yes & Long redeems for .4 units of Yes and every unit of Yes & Short redeems for .6.
An important distinction which we've so far neglected to make is the distinction between an abstract collection like X & A or Yes & Short and a concrete position, which is a collection together with a collateral token against which it is valued. Collections are purely abstract and used in the implementation. Positions are actual tokens on the chain.
Collections and positions are identified using their IDs. When using the standard combinatorial ID Manager, this ID is a 256 bit value. The position ID of a certain token can be calculated using the collection ID and the collateral.
- Combinatorial token: Any instance of
zeitgeist_primitives::Asset::CombinatorialToken. - Complete set (of a prediction market): An abstract set containing every outcome of a particular prediction market. One unit of a complete set is one unit of each outcome token from the market in question. After the market resolves, a complete set always redeems for exactly one unit of collateral.
- Merge: The process of exchanging multiple tokens for a single token of equal value.
- Split: The process of exchanging a token for more complicated tokens of equal value.
Calculating
alt_bn128
combinatorial tokens, as defined by Gnosis in Substrate.