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Overview

Once a proposal has accumulated enough stake to go live, it enters the trading phase. At this point, governance transitions from discussion to market-based decision making. Decision markets allow participants to trade on the expected outcome of a proposal and directly influence which decision is ultimately selected.

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From Proposal to Market

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Proposal Activation

After a proposal meets the required staking threshold, it becomes active and enters the trading phase.

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Liquidity Allocation

20% of the token supply is removed from the liquidity pool and used to establish the YES and NO markets for the proposal. These markets represent the anticipated future value of the token conditional on each outcome.

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Trading Window

Decision markets remain open for three days. This window provides sufficient time for investors to evaluate the proposal, react to new information, and express their expectations through trading.

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Decision Markets

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YES and NO Markets

Each proposal creates two outcome markets:
  • YES
  • NO
The price of each market reflects what participants believe the future value of the project’s token will be if the proposal is approved or rejected.

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Conditional Trading

Trades in decision markets are conditional. If the proposal resolves as YES, only trades in the YES market are executed and trades in the NO market revert.
If the proposal resolves as NO, only trades in the NO market are executed and trades in the YES market revert. Trades tied to the non-selected outcome do not execute.

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Price as a Forecast

Market prices represent aggregated expectations about future value. As participants trade, prices update in real time to reflect new information, analysis, and conviction.

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Example Trade Flow

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Trading the YES Market

If you believe a proposal will increase the value of a project’s token, you can buy in the YES market. If the proposal is approved, your trade executes at the price you entered. If the proposal is rejected, the trade does not execute.

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Trading the NO Market

If you believe a proposal will harm the project or reduce token value, you can buy the NO market or sell the YES market. This allows you to express a negative outlook while managing downside risk.

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Trade Resolution

When the trading window closes and the proposal resolves, only trades associated with the selected outcome are finalized.

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Risk Management and Strategy

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Responding to Harmful Proposals

Decision markets allow investors to actively respond to proposals that may destroy value. By positioning in the NO market, participants can hedge exposure while signaling opposition through price.

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Participating in Value-Creating Proposals

When markets underprice positive outcomes, participants can increase exposure by buying the YES market. Correct forecasts are rewarded when the proposal resolves.

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Outcome Selection

Once trading concludes, the outcome with the strongest market signal is accepted. On ArchDAO, governance decisions are determined by aggregated forecasts backed by capital rather than by votes or opinion signaling.