I'm trying to wrap my non-techie head around this project. Seems like there is so much going on in it.
So if I issue a binary option, do I put up X amount of funds and the buyer puts up X amount of funds and the network delivers the funds to the winner based on the data from the feed?
Step 1 : you create a binary option and setup all details
Step 2 : The collateral is frozen by network. The funds are taken from your address.
Step 3 : Another user buys a percent / all your option. His funds are also frozen by network.
Right after you create the option, the network checks the associated data feed after each block.
Possible outcomes : If the winning conditions are met the network will pay the buyers using a part / all your collateral. You will receive back the unused collateral.
If the option expire and the conditions are not met, you will receive the collateral + all investments.
RewardsWhen a user buys your option he will automatically up vote both your option and associated data feed. Based on those votes you get rewarded every 24 hours. Popular option = big rewards even if you loose it. Sometimes, you could even make more money if you loose the option than if you win it, because of rewards.
RisksBecause the whole process is managed by network, the only risk is the data feed. This could be mitigated by using multiple data feeds for the same option, but data feeds are heavily rewarded to provide accurate data. In 5-6 months, well established data feeds providers will emerge.
