Author: Revelo Intel
Compiled by: TechFlow
Did you know that @Polymarket is currently the world's largest prediction market platform, with the highest market liquidity for the 2024 US Presidential Election. Over $200 million has already been bet on this event?
What are prediction markets and what do you need to know?
Prediction markets are derivative markets where participants place bets on the outcome of an event. These markets are usually binary options where the outcome is either 1 or 0. By pooling the collective knowledge and bets of many people, the probability of an event occurring is estimated.
Prediction markets offer several advantages over traditional forecasting methods such as surveys and polls. They incentivize accurate forecasts, aggregate diverse information, provide real-time updates, reduce bias, and scale easily.
These markets are cost-effective, have a proven track record of accuracy, and are valuable to decision-makers in both the public and private sectors.
Outside of cryptocurrencies, offshore centralized providers often limit the amount of bets that can be placed on specific outcomes, similar to sports betting. This limits the ability of individuals to fully exploit their own insights, and the final outcome is often controlled by the centralized operator.
Cryptocurrency prediction markets remove these barriers, allowing users to leverage their knowledge without any restrictions. Blockchain and decentralized ledgers create transparent global markets that offer advantages over centralized systems. Smart contracts protect the rights of participants and ensure that the platform is fair and cannot be cheated.
Crypto prediction markets like @Polymarket , @AugurProject , and @azuroprotocol redefine market creation, enabling anyone to propose and bet on almost anything. Unlike traditional markets, they offer dynamic speculative opportunities that are not bound by predefined events. Users can participate as traders, liquidity providers, or event creators, providing users with flexibility and participation.
The market opportunity for prediction markets is vastly underestimated. With the derivatives market exceeding $100 billion, successful crypto projects are leveraging existing user bases rather than speculating on untapped markets. @Polymarket has raised $70 million in two rounds, with the most recent $45 million Series B led by Peter Thiel’s Founders Fund, with participation from Vitalik Buterin. So far, the platform has made $202 million worth of predictions through 2024.
Polymarket currently charges no fees to either makers or takers, but this structure may change in the future.
While some view prediction markets as casinos, the utility of tokens within this ecosystem provides unique use cases. Governance token holders can vote on disputes, ensuring fair resolution.
Decentralized mechanisms such as smart contracts and arbitration pools increase transparency and prevent manipulation. The system creates an immutable and auditable record of decisions. One of the main advantages of crypto prediction markets is their decentralization. Unlike traditional markets that are controlled by centralized entities, they run on blockchain networks, allowing anyone around the world to create and participate in markets.