# Outcome shares

Every prediction market on HermesTrade trades in **outcome shares** — ERC1155 tokens that represent a conditional claim on collateral. If you hold 1 YES share and the market resolves YES, you receive $1.00. If it resolves NO, your YES share expires worthless. This page explains how shares come into existence, how they are destroyed, and how your position is tracked.

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## What outcome shares are

Each market has exactly two outcome tokens, identified by the `clobTokenIds` array in the Gamma API's `Market` schema. The first element is the YES token ID; the second is the NO token ID. These are ERC1155 token addresses on Monad.

Owning shares is economically equivalent to having a bet: your shares represent a proportional claim on the collateral pool if your outcome wins. At resolution:

* **Winning shares** redeem at **$1.00** each
* **Losing shares** redeem at **$0.00** each

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## Prices as probabilities

The current price of a YES share reflects the market's collective implied probability that the outcome resolves YES.

* A YES share priced at **$0.65** means the market assigns \~65% probability to YES
* Prices are bounded between **$0.01 and $0.99** — no outcome is ever considered certain
* Because YES + NO must together represent the full collateral, `YES price + NO price ≈ $1.00` (any small difference is the bid-ask spread)

**P\&L example:**

You buy 100 YES shares at $0.65 per share.

* Cost: 100 × $0.65 = **$65.00**
* If YES resolves: receive 100 × $1.00 = $100.00 → **profit $35.00**
* If NO resolves: shares expire at $0.00 → **loss $65.00**

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## How shares come into existence — MINT

When you buy YES shares, you might wonder: who is selling them? In a prediction market, shares do not pre-exist — they are minted on demand. When a buyer who wants YES and a seller who wants NO are matched at a price, the system creates a new pair of shares:

* The buyer receives **YES shares**
* The seller receives **NO shares**
* The combined collateral ($1.00) is locked until resolution

In the CLOB API, this is recorded as a trade with `match_type: MINT`. The total supply of outcome shares grows with each MINT match.

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## How shares are destroyed — MERGE

If you hold both YES shares and NO shares for the same market, you hold a fully collateralized position — regardless of outcome, your combined shares are worth exactly $1.00. The system allows you to MERGE them back into collateral, removing both tokens from circulation.

In the CLOB API this appears as `match_type: MERGE`. MERGE reduces the total supply of outcome shares.

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## COMPLEMENTARY matching

Not every match requires new shares to be minted. If a YES buyer is matched against someone who already holds YES shares and wants to sell them, the existing shares simply change hands — no new tokens are created. This is the most capital-efficient match type.

In the CLOB API this appears as `match_type: COMPLEMENTARY`.

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## Match type summary

| `match_type`    | What happens                                  |
| --------------- | --------------------------------------------- |
| `MINT`          | New YES+NO pair created; collateral locked    |
| `COMPLEMENTARY` | Existing shares change hands; no new issuance |
| `MERGE`         | YES+NO pair destroyed; collateral released    |

***

## Your position — `GET /balance-allowance`

Your current position in a specific outcome token is available from the CLOB API at `GET /balance-allowance?asset_id=<token_id>`.

**`BalanceAllowanceResponse` fields:**

| Field               | Description                                                  |
| ------------------- | ------------------------------------------------------------ |
| `balance`           | Total outcome shares you own                                 |
| `locked`            | Shares committed to open limit orders (unavailable to trade) |
| `virtual_available` | Shares available to place new orders (`balance − locked`)    |
| `allowances`        | On-chain approval amounts, keyed by token address            |

The `locked` quantity is important: if you have 100 YES shares and a sell order for 60 of them, your `virtual_available` is 40. You cannot place another sell order for more than 40 shares until the existing order is filled or canceled.

{% hint style="info" %}
When a market resolves, your winning shares are automatically redeemed for collateral. You do not need to manually claim — the settlement process handles it.
{% endhint %}


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