# Conditional token

Also written conditional tokens, CTF token, Conditional Tokens Framework.

*https://predictionmarkets.tools/glossary/conditional-token · next to Prediction Market Analytics & Dashboards*

**Definition:** The ERC-1155 token a Polymarket position actually is: one outcome of one question, created by the Gnosis Conditional Tokens contracts against locked collateral. One unit of collateral splits into a complete set, one token per outcome, and a complete set merges back into collateral. Once the oracle reports, each token redeems for its share of the payout. It is a claim on collateral, not a coin with a supply of its own.

A dashboard that reads Polymarket from the chain is reading conditional tokens, whether or not it
uses the phrase. Most of the ways two such dashboards disagree about a wallet's position, its
profit or a market's volume trace back to three operations on these tokens that are not trades.

## How it works

Gnosis's Conditional Tokens contracts build everything from a **condition**: a question that one
named oracle will report on, with a fixed number of outcome slots. A yes/no question has two. The
condition's identifier is a hash of the oracle, the question and the slot count, so the same
wording under a different oracle is a different condition.

A **position** is a claim on some subset of those slots, backed by a particular collateral token,
and each position is an ERC-1155 token whose ID is a hash of the collateral and the slots it
covers. On Polymarket, the Yes share and the No share of a market are two such tokens. Polymarket's
current exchange contracts, CTF Exchange V2, describe themselves as the system for trading these
assets, with operator-run matching and a wrapped collateral layer.

Three operations create, destroy and cash out positions:

- **Split.** Lock one unit of collateral and receive one token for each outcome — a complete set.
  The Gnosis documentation notes this generalises the "buy all outcomes" call of its earlier
  market contracts.
- **Merge.** Hand back a complete set and receive the unit of collateral. This is the reverse, and
  the reason a Yes and a No together are always worth one unit before resolution.
- **Redeem.** After the oracle reports a payout vector — one number per slot, summing to one —
  each token converts into collateral at its slot's share. A Yes on a question that resolved yes
  takes the whole unit.

Polymarket's multi-outcome adapter states the constraint that follows: once collateral is split
into position tokens, there are only two ways to get it back, merging complete sets or redeeming
after resolution. The exchange's own architecture lists mint and merge among its asset operations,
so a match can create a new pair from two buyers rather than move an existing token from a seller
to a buyer.

### Two cases that surprise people

**A payout does not have to be all or nothing.** The framework's own scalar example resolves a
condition to nine-tenths and one-tenth, and Polymarket's adapter README notes that its UMA
resolution adapter can return `[1,1]` — equal weight on both sides, so each token redeems for half.

**Multi-outcome markets add a conversion.** In a market of mutually exclusive candidates, the
adapter lets a holder turn No tokens on several candidates into Yes on the rest plus collateral,
because the two positions pay the same in every outcome. Value moves between tokens without
anyone else taking the other side.

## Why it matters here

**A position can change with no trade to explain it.** Splitting, merging, redeeming and the
multi-outcome conversion all move value in and out of a wallet's positions without a counterparty
fill. A tracker that computes profit from the trade history alone will show a gap exactly where
those happened. [OrcaLayer](https://predictionmarkets.tools/tools/orcalayer) tracks the split, merge and redeem operations
separately, and [tracking a wallet's positions](https://predictionmarkets.tools/how-to/track-a-wallets-positions)
walks through what else a reconstruction has to handle.

**Volume and open interest depend on how you count a mint.** When a match creates a fresh pair
rather than moving an existing token, the number of tokens outstanding grows and no seller exists.
A dashboard counting transfers, one counting fills and one counting collateral locked will each
report something defensible and different. [Why two dashboards disagree on volume](https://predictionmarkets.tools/guides/why-two-dashboards-disagree-on-volume)
is the long version.

**"Token" suggests a coin, and this is not one.** A conditional token is an ERC-1155 ID, not an
ERC-20 contract: it is identified by a contract address and a number rather than by a ticker, and
every question mints its own. Its value before resolution is whatever its book says; after
resolution it is exactly its slot's payout, and that payout is not collateral in the wallet until
someone calls redeem.

**Winning is a transaction, not an event.** After a market resolves, the tokens sit in the wallet
until they are redeemed, and the collateral arrives only then. The
[Polymarket CLI](https://predictionmarkets.tools/tools/polymarket-cli) has `ctf redeem` and a separate `ctf redeem-neg-risk` for
multi-outcome markets, and [polymarket-client](https://predictionmarkets.tools/tools/polymarket-client) exposes the same three
operations as library calls. [How money gets out](https://predictionmarkets.tools/guides/how-money-gets-out) covers the steps
after that.

**The ID is derived, so check it rather than trust it.** Because a position ID is a hash of the
collateral and the condition, a tool that computes it from the wrong collateral or the wrong
condition gets a valid-looking ID that matches nothing. When a wallet shows no position where one
should be, compare the token ID against the market's own listing before assuming the position is
gone.

## Where you will meet this

- [Polymarket CLI](https://predictionmarkets.tools/tools/polymarket-cli.md)
- [py-clob-client](https://predictionmarkets.tools/tools/py-clob-client.md)

## Sources

1. [Conditional Tokens documentation, glossary and developer guide](https://github.com/gnosis/conditional-tokens-contracts/tree/master/docs) — Gnosis, read 2026-09-27
2. [Polymarket CTF Exchange V2, repository README](https://github.com/Polymarket/ctf-exchange-v2) — Polymarket, read 2026-09-27
3. [Polymarket Multi-Outcome Markets (neg-risk-ctf-adapter), README](https://github.com/Polymarket/neg-risk-ctf-adapter) — Polymarket, read 2026-09-27

*Last updated 2026-09-27. A reference page, corrected in place — not a dated post.*