Negative Risk Markets on ProbiFi

Some winner-take-all event groups on ProbiFi may be deployed using a mechanism called negative risk, a capital-efficient system that enables flexible share conversions across markets within the same event.

This model allows users to convert NO shares in one market into YES shares across other markets in the same group — without needing to create separate fully collateralized positions in each.

ProbiFi will include a negRisk flag in its public API, which denotes whether a market is part of a negative risk structure.

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What Is Negative Risk?

In traditional binary markets, each YES and NO share must be backed 1:1 by collateral (e.g. KAS). But in negative risk events, markets are linked together under the assumption that only one outcome will be true.

This means:

• A NO share in Market A (e.g. “Will Alice win?”) Can be converted into a YES share in Market B (e.g. “Will Bob win?”)

• This increases capital efficiency across mutually exclusive outcomes

These conversions are made possible through a contract known as the Negative Risk Adapter, which will be deployed alongside ProbiFi’s market framework on Kaspa L2s like Igra or Kasplex.

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Augmented Negative Risk

While negative risk improves capital efficiency, it assumes that all possible outcomes are known before trading begins. In reality, some markets (like elections or tournaments) may require more flexibility — especially if new candidates or options appear mid-event.

To solve this, ProbiFi supports an extended system called augmented negative risk.

How It Works

In augmented negative risk markets:

• Some outcomes are deployed as placeholders (e.g., Person A, Candidate X)

• These placeholders can be clarified via an on-chain bulletin board to become named outcomes later

• A special "Other" outcome is also deployed as a catch-all for anything unresolved

This allows the "universe" of outcomes to evolve over time without needing to cancel or redeploy markets, which is critical in fast-moving or unpredictable event spaces.

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Trading Guidelines for Augmented Negative Risk

To maintain clarity and fair settlement:

• Only trade named outcomes (those clearly labeled from launch or through clarification)

• Ignore unnamed placeholders until they are explicitly defined

• Avoid trading the "Other" outcome unless no named outcome matches the resolution

If an event concludes and the correct outcome hasn’t been named (either directly or via clarification), the market will resolve to Other by default.

Detection in the API

In the ProbiFi API, a market is marked as augmented negative risk if:

• enableNegRisk = true

• negRiskAugmented = true

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Naming Conventions in Augmented Events

Category	Example	Description
Named Outcome	Alice, Bob, Charlie	Tradable YES/NO positions
Placeholder Outcome	Person A, Candidate 1	Will be clarified later
Explicit “Other”	Other	Default fallback for unmatched outcomes

Unnamed outcomes will not be visible in the ProbiFi user interface until clarified.