Guide 3 · Risks
What can go wrong in a prediction market
You can lose everything you put into a position. Beyond the obvious risk of being wrong, prediction markets carry liquidity, leverage, vault, oracle, stablecoin, smart-contract and phishing risks. Each is described below with a short scenario and something you can do about it.
1. Being wrong
Scenario: you buy NO at 20¢ on a 20-to-1 upset and it happens anyway. Your shares are worth $0. On a normal trade the loss stops at what you spent. A cheap share is cheap because it usually loses.
What you can do: size positions so a total loss is survivable, and don’t read a low price as a bargain by default.
2. Getting out at a bad price
Scenario: you want to sell a large position in a quiet market. Your own sale pushes the price down, and your average exit is several cents worse than the quote you saw.
What you can do: check market depth before buying anything you might need to sell, and split large exits.
3. Leverage liquidation
Scenario: you hold 5× YES from 60%. An early goal against your side pushes YES to 50% for ten minutes. The position is liquidated, your collateral is gone, and your side then comes back to win.
What you can do: treat liquidation as a normal outcome, not a rare one. How liquidation works.
4. LP Vault losses
Scenario: a heavily traded favourite wins, and the market maker pays out far more than it collected. The LP Vault absorbs it and depositors’ balances fall.
What you can do: deposit only what you can afford to lose, and remember the 7-day withdrawal cooldown.
5. A wrong result
Scenario: a resolver proposes the wrong outcome on a quiet market and nobody challenges within 48 hours. It becomes final.
What you can do: check proposals on markets you hold. A challenge with a matching bond is how errors get fixed.
6. The stablecoin slips
Scenario: payouts are $1 of a USD stablecoin, and that stablecoin briefly trades at 97¢. Your winning shares are worth less in real dollars. 369X does not guarantee the peg.
What you can do: understand who issues the settlement stablecoin and what backs it.
7. A bug in a contract
Scenario: an undiscovered bug locks funds in a contract. Audits reduce this risk but can’t remove it, and 369X’s core contracts are intended to be immutable, so a bug can’t be patched in place.
What you can do: wait for published audit reports before using real funds, and don’t keep more in the protocol than you need.
8. Phishing and fake apps
Scenario: a message links to a copy of the app that asks you to approve unlimited spending of your stablecoin. The approval empties your wallet.
What you can do: reach the app only from this site, and never share a seed phrase. Verification checklist.
A sensible checklist
- Could I lose this whole amount without it hurting?
- Is the question clear, and do I know its resolution source?
- Is the market busy enough to exit if I change my mind?
- Have I read the leverage section before using leverage?
- Is prediction-market trading allowed where I live?
- Did I reach the app from the official site, not a link in a message?
The full risk disclosure includes token-related risks.