Prediction markets have been around since long before the internet was even invented. Today, they have a myriad of uses beyond predicting the weather and winning bets.
The prediction markets were a novel concept when they started, by now we’re very familiar with them. There are several areas of application, including entertainment (prediction sports games) and commerce (stock or commodity futures). The idea is to create a market where people can bet on the outcome of a future event. If you know something that others don’t, you can make money here.
Predictive markets are a relatively new phenomenon that has taken the internet by storm. Originally pitched as a financial tool to predict the outcomes of real-world events, such as elections and celebrity deaths, they have become venues for everything from virtual tokens to bets on conspiracy theories. Although simple in principle, when it comes to the details of how predictive markets function at scale, things get a little murkier.
What is a Prediction Market?
In their simplest, most basic form, prediction markets are a form of wagering on particular outcomes of future events. The markets may also be used to forecast the probability of any outcome (or class of outcomes) arising from a known process.
To give you a brief overview, the prices in an election betting market may determine sentiment towards the candidates: for example, if candidate A is trading at 2-1 and candidate B 5-2, we might infer that the markets consider B to be the stronger candidate.
Predictive markets are based on the idea that the people closest to the data have the best chance for making accurate predictions and can be used for everything from scientific research, political elections, financial forecasting, fantasy sports, and even dating.
Read on to find out more about prediction markets and why this type of innovation is considered by many as an important breakthrough that will be adopted globally. In this segment, we have covered some of the web3 predictive markets where you can predict, earn or just look around for research purposes.
Augur literally translates to an event or circumstance that portends a good or bad outcome. Augur is an Ethereum-based decentralized prediction market where you can bet on any conceivable event. Augur allows you to leverage your knowledge and focus it on financial gain. Further, It allows others to discover and reward your insight.
Augur claims to not take a cut on the winning bets and thus allowing players to gain the maximum of what they can predict while keeping fees to a bare minimum. Currently, it hosts different prediction markets such as Sports, Crypto, Politics, etc. It can be your new No-Limit Betting Platform.
Augur combines the magic of prediction markets with the power of a decentralized network to create a stunningly accurate forecasting tool–and the chance for real money trading profits. The Reputation (REP) token allows users to report on the outcome of real-world events, creating a continually evolving landscape of information.
Polymarket is another predictive market in web3 built on Ethereum (and scaled via Polygon) that calls itself an information market. They don’t extract any profit out of bets or predictions made in certain events of the future. It is meant for educational and informational purposes where you can also earn by gambling or making informative decisions based on market sentiments and other factors.
Polymarket does not host any of the predictive markets, it aggregates and displays all the markets breathing on Ethereum and other sidechains. It uses USDC and Ether for placing predictions. Also, users here have to deposit the tokens in order to place bets and cannot use a third party wallet or decentralized wallets.
Omen is a prediction market protocol and product owned by Dxdao. It is built on top of the gnosis conditional token framework. The best part about Omen is anyone can create a prediction market or provide liquidity, unlike other platforms where there are different conditions to start an information market.
It uses Realit.io with Kleros as an arbitrator to resolve a market’s outcome. Currently, users can predict outcomes with Dai and Eth tokens via connecting their Metamask wallet or with Wallet Connect supported wallet. Its clean user interface and wide range of predictive markets make up for the 2% extra fees a user have to pay on top of Ethereum gas for participation.
PlotX V1 a decentralized non-custodial prediction market protocol was launched on the Ethereum Network dubbed as Uniswap of Prediction Markets. Currently what users get is PlotX V2, a scaled solution that uses Polygon. The platform uses $PLOT as its utility token. What gives PlotX an edge over other standard prediction market platforms is its ability to perform gasless transactions along with its cutting edge features such as Guaranteed liquidity, Cross-chain swaps, etc. Furthermore, it hosts six crypto markets as of now (BTC, Matic, SHIB, DOGE, Ether, and BNB). Users get to explore 1 — hour/day/week markets for quick turnarounds. Along with prediction markets, it has its own research forum where the community gives feedback on the current platform.
Prediction markets are the market-based instrument for yanking millions of brains around the world to cooperate for advanced global planning. This enables a transition from brutal competition to amazing cooperation. It uses the wisdom of the crowd to develop predictions that are guaranteed to become reality.
Alongside other blockchain-related innovations that have been made possible by the electronic transfer of value – such as Bitcoin and smart contracts – predictive markets can be seen as effectively bringing an entirely new monetary system, or financial model into play.