Defining Positions

In order to define a position, we first need to designate a collateral token. This token must be an ERC20 token which exists on the same chain as the ConditionalTokens instance.

Then we need at least one condition with a outcome collection, though a position may refer to multiple conditions each with an associated outcome collection. Positions become valuable precisely when all of its constituent outcome collections are valuable. More explicitly, the value of a position is a product of the values of those outcome collections composing the position.

With these ingredients, position identifiers can also be calculated by hashing the address of the collateral token and the combined collection ID of all the outcome collections in the position. We say positions are deeper if they contain more conditions and outcome collections, and shallower if they contain less.

As an example, let's suppose that there is an ERC20 token called DollaCoin which exists at the address 0xD011ad011ad011AD011ad011Ad011Ad011Ad011A, and it is used as collateral for some positions. We will denote this token with $.

We may calculate the position ID for the position $:(A|B) via:

web3.utils.soliditySha3({
    t: 'address',
    v: '0xD011ad011ad011AD011ad011Ad011Ad011Ad011A'
}, {
    t: 'bytes32',
    v: '0x229b067e142fce0aea84afb935095c6ecbea8647b8a013e795cc0ced3210a3d5'
})

The ID for $:(A|B) turns out to be 0x5355fd8106a08b14aedf99935210b2c22a7f92abaf8bb00b60fcece1032436b7.

Similarly, the ID for $:(LO) can be found to be 0x1958e759291b2bde460cdf2158dea8d0f5c4e22c77ecd09d3ca6a36f01616e02, and $:(A|B)&(LO) has an ID of 0x994b964b94eb15148726de8caa08cac559ec51a90fcbc9cc19aadfdc809f34c9.

Helper functions for calculating positions also exist:

function getPositionId (IERC20 collateralToken, bytes32 collectionId) external pure returns (uint)

Constructs a position ID from a collateral token and an outcome collection. These IDs are used as the ERC-1155 ID for this contract.

Parameters:

• collateralToken – Collateral token which backs the position.
• collectionId – ID of the outcome collection associated with this position.

All the positions backed by DollaCoin which depend on the example categorical condition and the example scalar condition form a DAG (directed acyclic graph):