what's Conditional Token Framework?

Conditional Token Framework (CTF) is an open-source set of Ethereum smart contracts developed by Gnosis for creating and managing conditional tokens. These ERC-1155 tokens represent possible outcomes of events or conditions, backed by collateral, enabling applications like prediction markets. The framework works by preparing conditions (questions with outcome slots resolved by oracles), splitting collateral into outcome-specific tokens, and allowing recombination for combinatorial markets. Payouts are distributed based on oracle-reported outcomes, ensuring collateral conservation across all possibilities.

CTF gains traction for its token structure and LMSR parameters in prediction markets using order books.