In this thread, we're going to talk about one of @Ocean Protocol 's main products, called Ocean Predictoor.
It has undergone some very important changes that will change the game in the direction of ‘maximum accuracy’ and that's great.
Let's take a closer look:
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First of all, let us remind you what Ocean predictor is.
It is an AI-powered prediction application developed by Ocean Protocol. It operates on-chain and focuses on creating accurate prediction feeds for various use cases, for now its about predictions of crypto assets price change.
Predictors with the help of special bots make their predictions on price changes, and traders buy the predictions and use them in their trading. The trick is that predictors are responsible for their predictions and if they are wrong, they lose money, if they are right, they make money.
You can read more about the app here - docs.predictoor.ai.
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Some time after launching the app, it became clear that a large number of predictors started using the ‘50/50’ tactic, where the bot bets half of the assets on the price moving up and half on the price moving down. This was popular because it was very profitable and relatively safe. To maximise their profits, people simply increased their bets to the maximum and the monthly volume began to reach up to a billion dollars. To put it mildly this is not what was intended to be achieved with the introduction of this app. Ocean Predictoor is about rewarding the accuracy of a given prediction in order to increase the accuracy.
It created a problem that needed to be solved.
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Problem is...
It has been found that model-based bots are difficult to make profitable. Here's why: it's easier to make money by predicting both a rise and a fall at the same time, not just one side.
The 50/50 bots bet on both sides of each prediction, always picking up both good and bad outcomes, which contributed to profitability. In contrast, the bots on the models only bet on one side: up or down. If the prediction was wrong, the bet was cut completely, leading to high volatility and hurting profitability. It became clear that to compete with the 50/50 bots, we needed to improve the accuracy of the models and continued research in this direction.
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To solve this problem, two-sided prediction bots have been created, and higher accuracy models have been developed.
Two-sided prediction bots work on the following principle: if the growth estimate of an asset is 60% and the bet volume is 1000 Ocean, it will temporarily bet 600 Ocean on the upside and 400 on the downside.
It is important to note that the bot is always on both the winning and losing side. This reduces its variance and increases its profitability
Increased accuracy of the models
The accuracy of our own internal models has been improved. For models with 52% accuracy, two-sided bots could compete with 50/50 bots, while one-sided bots could not. For 56% accuracy models, even one-sided bots could compete, and two-sided bots didn't help.
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Then players started using the updated two-way bots and their accuracy was well above 50%.
The 50%/50% strategy only worked in an environment where each predictor is 50% accurate, using the 50%/50% strategy means that the predictor will be right as often as he is wrong. Each correct prediction compensates for the losses from the wrong prediction and also earns a share of the reward depending on the amount of the bet.
As the accuracy of predictions has increased, the 50%/50% environment has been disrupted, making this strategy unprofitable. When players with an accuracy higher than 50% appear in this environment, they take away part of the losses incurred by the 50/50 strategy, so the profit of people using this strategy ceases to fully cover the losses.
You can read more about two-sided bots here - blog.oceanprotocol.com/predictoor-introducing-two-sided-prediction-bots-66bbbb53be1b.
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So the 50/50 strategy is either completely out of play or their bets are reduced to a minimum, which has led to an overall reduction in bets as well.
Predictoor rewards accurate predictions, and is exactly as planned. Problem solved.
Predictors have reduced their bet amounts to maximise their income. Adapting to these changes and using smarter strategies is a key part of the game.
You can read more about the changes here - blog.oceanprotocol.com/predictoor-dynamics-have-shifted-towards-accuracy-b4a537b930d2.
#DataAnalytics #predictons #altcoins #ETHETFsApproved $OCEAN $ETH