Protection (YES/NO Tokens)
Understand how YES and NO tokens work and how to trade credit protection in Siprifi markets.
What is Protection?
In traditional finance, a Credit Default Swap (CDS) is insurance against a credit event. In Siprifi, protection is represented by YES tokens:
- YES tokens = Protection buyer (betting event WILL occur)
- NO tokens = Protection seller (betting event will NOT occur)
Buying Protection (YES)
When you buy YES tokens, you're buying insurance against a credit event:
| Aspect | Details |
|---|---|
| Cost | 0.1 ETH per YES token |
| Maximum Payout | Proportional share of total collateral |
| When Profitable | Credit event occurs (YES wins) |
| Risk | Lose 0.1 ETH if event doesn't occur |
Think of YES tokens as insurance premiums. You pay upfront and receive payout only if the insured event occurs.
Selling Protection (NO)
Market issuers automatically receive NO tokens when users buy YES:
| Aspect | Details |
|---|---|
| How to Get | Create a market or receive from issuer |
| Income | Collateral if event doesn't occur |
| When Profitable | Credit event does NOT occur (NO wins) |
| Risk | Lose collateral if event occurs |
Token Lifecycle
- Creation: Market issuer deposits ETH, receives NO tokens
- Trading: Buyers purchase YES tokens with ETH
- Maturity: Trading stops, awaiting resolution
- Resolution: Issuer declares outcome
- Claiming: Winners burn tokens for ETH
Payout Calculation
When you claim winnings after resolution:
- Your Payout = (Your Tokens / Total Winning Tokens) × Total Collateral
- Example: You hold 10 YES tokens out of 100 total, collateral is 10 ETH
- If YES wins: You receive (10/100) × 10 ETH = 1 ETH
Note: YES and NO tokens are transferable ERC-20s. You can trade them on secondary markets, but liquidity is not guaranteed.