What is Conditional Tokens (ERC-1155)?
Conditional Tokens built on the ERC-1155 standard let users create, trade, and settle bets on uncertain future events by turning them into tokenized outcome shares on Ethereum.
Definition: What is Conditional Tokens (ERC-1155)?
Conditional Tokens are specialized ERC-1155 tokens made for prediction markets. They stand for specific positions on the outcomes of real-world events, from election results to sports matches. The ERC-1155 standard, laid out by the Ethereum Foundation, packs multiple token types into one contract—both fungible and non-fungible—which suits handling many outcome shares at once.
These tokens add operations such as splitting collateral into outcome positions, merging them back together, and redeeming based on oracle-reported results. The Gnosis Conditional Tokens framework first put this into practice, with contracts live on mainnet since around 2019. As of 2026, platforms continue building on the approach for sharper forecasting tools.
How Conditional Tokens Work: Splitting, Merging, and Resolution
The process begins with preparing a condition: a question, an oracle, and the number of possible outcomes. Users then split collateral tokens, such as stablecoins, into conditional tokens that represent each possible result. In a binary market, for instance, collateral turns into equal amounts of Yes and No tokens.
Merging reverses the split by combining outcome tokens back into collateral. Once an oracle reports the actual result, holders of the winning tokens redeem them for the underlying collateral, while losing positions lose all value. Every position stays fully backed by collateral.
Position IDs come from hashing the collateral token address with collection identifiers tied to conditions and index sets. This produces unique ERC-1155 token IDs for every combination of outcomes, even across multiple conditions, which supports complex combinatorial markets. Batch operations from ERC-1155 keep gas costs down when managing several positions together.
In practice the framework handles markets with up to 256 outcomes per condition. Developers call functions like prepareCondition, splitPosition, mergePositions, and redeemPositions on the ConditionalTokens contract. The design encourages interoperability across different prediction market platforms.
Readers interested in testing forecasts on current events in sports, politics, crypto, news, and global trends can explore Zanlo's skill-based prediction market platform, which offers built-in analytics, historical stats, live data, and AI-powered insights across 18 categories at https://new.zanlo.com/. Zanlo emphasizes user control, allowing entry into Yes/No positions anytime with the ability to sell or exit before resolution, plus performance tracking to refine prediction skills.
Key Properties: Decentralization, Safety, and Value
Conditional Tokens run on decentralized Ethereum infrastructure, so no single party controls outcome resolution beyond the chosen oracle. This cuts counterparty risk compared with traditional betting. Security rests on audited contracts, such as the original Gnosis implementation, and on reliable oracles.
Value comes from the underlying collateral and from market demand for particular outcome positions. Prices reflect the crowd's view of probabilities, creating information markets that pool collective insight. Supply grows on demand through splitting and stays capped by available collateral.
Compared with plain ERC-20 tokens, ERC-1155 Conditional Tokens handle multi-outcome scenarios efficiently without separate contracts for each type. They also allow semi-fungible behavior, where some positions act like NFTs when unique.
Risks include oracle disputes, smart-contract vulnerabilities, and regulatory uncertainty around prediction markets. Users should only risk amounts they can afford to lose.
Comparison: Conditional Tokens vs Standard ERC-20 and ERC-721 Tokens
| Feature | Conditional Tokens (ERC-1155) | Standard ERC-20 | Standard ERC-721 |
|---|---|---|---|
| Origin | Gnosis framework extending ERC-1155 for prediction markets | Fungible token standard for identical assets | Non-fungible token standard for unique assets |
| Purpose | Represent outcome positions in conditional events | Represent currency or identical shares | Represent unique collectibles or ownership |
| Technology | Multi-token with split/merge/redeem logic | Simple balance and transfer | Unique ID per token |
| Supply | Dynamic, created via collateral splitting | Fixed or mintable per rules | Usually fixed per collection |
| Use Case | Prediction markets and forecasting | Payments, DeFi liquidity | Art, gaming items, real estate |
This table shows how Conditional Tokens blend elements of both fungible and non-fungible standards while adding features tailored to prediction markets.
Where to Use Conditional Tokens and Platforms
These tokens drive decentralized prediction markets on Ethereum and compatible chains. Users work through frontends that hide the smart-contract details, letting them deposit collateral, manage positions, and trade.
Zanlo stands out for its focus on skill development, providing real-time data and community features to view and follow top predictors. Its risk-free onboarding with bonus funds helps newcomers practice forecasting without initial capital risk.
Other ecosystems include integrations with decentralized exchanges for trading the outcome tokens and oracles like those used in Polymarket for resolution. Always verify contract addresses and use reputable interfaces to minimize risks.
Practical steps include connecting a wallet, approving collateral, calling split functions for chosen positions, monitoring resolutions, and redeeming winners. Advanced users can build custom strategies that combine multiple conditions for nuanced bets on correlated events.
The framework's flexibility covers everything from simple binary markets to complex multi-outcome and conditional scenarios, making it a core tool for decentralized information aggregation in 2026 and beyond.