Glossary

This glossary defines key terms used across Melee Docs to help readers understand the platform’s mechanics, markets, and trading strategies.

Alpha Early information or insight that gives a trader an advantage in predicting outcomes.

Arbitrage A trading strategy where a user exploits price discrepancies across outcomes or markets to lock in profit.

Bonding Curve A mathematical pricing model where the cost of buying an outcome increases as more shares of that outcome are purchased. Being early means a lower entry price.

Buy / Position The act of entering into an outcome or group of outcomes by spending collateral.

Collateral The token used to back trades and payouts on Melee markets (e.g., SOL)

Creator A user who launches a new market on Melee, often leveraging their community or following.

Decentralized Market A market that is created and settled fully on-chain without central control.

Gas Fee The network transaction cost required to execute a trade or action on-chain.

Hedge / Hedging A risk management strategy where a user holds multiple positions to offset potential losses (e.g., buying both Yes and No in a market or all available options).

Initial Liquidity Seed capital provided when a market is launched, ensuring there’s enough trading depth for users to enter.

Liquidity The pool of capital available in a market for trading outcomes.

Market A question or event with defined outcomes that users can trade on (e.g., “Will Team A win?”).

Market Maker An algorithm or participant that ensures continuous pricing and liquidity in a market.

Melee All A feature that allows users to buy exposure across all outcomes in a market, letting them benefit from overall market growth instead of a single outcome.

Multiplier A factor showing how much a user’s position grows if the outcome resolves in their favor.

Outcome One of the possible resolutions to a market question (e.g., Yes / No / Team A / Team B).

Payout The distribution of rewards to holders of the winning outcome(s) once a market resolves.

Position The stake or exposure a user holds in a market (e.g., owning 20 shares of “Yes”).

Prediction Market A marketplace where users trade outcome shares tied to future events. Prices reflect collective beliefs about probability.

Resolution The official determination of which outcome is correct.

Risk Management Strategies like hedging or diversification used to control potential downside.

Speculator A trader who participates in markets based on expected value and price movement.

Spread The difference in prices between multiple outcomes or between buy/sell orders.

Tokenized Outcome An outcome represented as a tradeable market, allowing users to purchase shares.

Trading Volume The total value of trades in a market, used as a measure of market activity.

Volatility A measure of how much prices fluctuate in a market over time.

Winning Outcome The final resolved answer in a market that determines payouts.