Market Adapters

Market adapters are the bridge between Varla and prediction market platforms. Each adapter implements a standard interface, allowing VarlaCore and the liquidators to interact with different position token standards.

contracts/adapters/IMarketAdapter.sol — interface
contracts/adapters/PolymarketCtfAdapter.sol
contracts/adapters/PolymarketNegRiskMergeAdapter.sol
contracts/adapters/OpinionCtfExecutionEngineAdapter.sol

IMarketAdapter Interface

All adapters implement the IMarketAdapter interface. This standardizes how Varla interacts with different prediction market token systems.

interface IMarketAdapter {
    function convert(
        uint256 positionId,
        uint256 amount,
        address recipient
    ) external returns (uint256 outputAmount);

    function getPositionToken() external view returns (address);
    function getCollateralToken() external view returns (address);
}

The convert() function is the key operation — it converts prediction market position tokens back into the underlying collateral token (e.g. merging YES+NO → USDC).

Adapters

PolymarketCtfAdapter

Integrates with Polymarket's Conditional Token Framework (CTF). Handles standard Polymarket positions where ERC1155 outcome tokens can be redeemed after market resolution.

Detail	Value
Position token	ERC1155 (Polymarket CTF)
Collateral token	USDC
Convert method	Redeems resolved positions via CTF

PolymarketNegRiskMergeAdapter

Handles Polymarket's NegRisk positions — markets with a binary YES/NO structure where complementary tokens can be merged back into the underlying collateral without waiting for resolution.

Detail	Value
Position token	ERC1155 (NegRisk wrapper)
Collateral token	USDC
Convert method	Merges complementary positions via NegRisk adapter
Key dependency	`INegRiskAdapter` interface

This is the primary path used by VarlaMergeLiquidator — it allows liquidators to merge YES+NO tokens without needing market resolution.

OpinionCtfExecutionEngineAdapter

Integrates with Opinion's CTF Execution Engine. Handles Opinion market positions which use a similar conditional token framework but with a different execution layer.

Detail	Value
Position token	ERC1155 (Opinion CTF)
Collateral token	USDC
Convert method	Redeems/merges via Opinion's execution engine

Adding New Adapters

To integrate a new prediction market platform, implement the IMarketAdapter interface:

contract MyMarketAdapter is IMarketAdapter {
    function convert(
        uint256 positionId,
        uint256 amount,
        address recipient
    ) external override returns (uint256 outputAmount) {
        // 1. Transfer position tokens from caller
        // 2. Convert/redeem via platform
        // 3. Send output tokens to recipient
        // 4. Return amount of collateral received
    }

    function getPositionToken() external view override returns (address) { ... }
    function getCollateralToken() external view override returns (address) { ... }
}

✦ Key Takeaways

Three production adapters: Polymarket CTF, Polymarket NegRisk, and Opinion CTF
All implement IMarketAdapter — standardized convert(), getPositionToken(), getCollateralToken()
NegRisk merge adapter is critical for liquidations (merge without resolution)
New prediction markets can be added by implementing the IMarketAdapter interface