SIP-74: Binary Markets with custom questions

Author	Danijel, Farmwell
Discussions-To	https://research.synthetix.io/t/sip-custom-binary-options/118
Status	Rejected
Created	2020-07-25

Simple Summary

So far Binary Markets can only be created on asset strike prices on a certain date. It would be very attractive to be able to create custom markets, such as: "Will ETH 2.0. be released in 2020?"

Abstract

Allow for Markets to be created with a custom binary question. Introduce a mechanism to resolve such markets.

Motivation

Binary Markets are risk free profit for stakers. With that in mind we want to attract as many bidders as possible. Bidding on asset prices has attracted a good portion of bidders, but having the possibility to bet on anything you can think of will surely attract many more bidders.

Specification

The sip would allow users to create markets with a custom binary question. It would also propose how those markets would be resolved.

Overview

We have already seen interest to create custom markets, such as "Will Trump win the next elections?". If we can implement this in the Synthetix framework, we could create a much bigger value of SNX stakers.

Rationale

It would be the responsibility of the Market creator to create a question that would attract bidders. If his question is not clearly formulated, or the bidders find the market risky to manipulation, they would stay away from it, but the important aspect is that there is no risk to the stakers.

Technical Specification

Allow a free text question to be entered on market creation. Bidding date and Maturity date mechanisms are kept.

Resolving custom markets

As resolving such custom markets is not feasible using price feeds and the curent mechanism, the proposed solution is to formulate a governance for resolving custom questions.

We would define 10 addresses allowed to resolve a binary market with a custom question.
The votes can be cast only after maturity date
if 7 governance votes have been cast for a single outcome, the market is resolved
The addresses should be those of the core team and volunteering guardians

Dealing with cases where the market can not be resolved

Some question may depend on unpredictable circumstance, such as elections being cancelled due to Covid situation. To deal with such cases these markets should have a contract function allowing the governance addresses to cancel it. The cancelation would mean all bidders can reclaim their bids (get refunds), minus the gas costs.

In summary, it means every custom market will have three potential outcomes:

Yes
No
Cancelled The same rule for number of governance votes apply to any of those: Minimum 7 votes needed.

Test Cases

Will ETH 2.0. be released 2020.?
Will Trump win the next presidential elections?