What Exactly are Prediction Markets? 🔮

Prediction markets are online platforms where users wager on the outcomes of future events. In onchain prediction markets, users compete directly with each other in a peer-to-peer, trustless, and transparent manner. There are four main categories of prediction markets:

📈 Financial markets: Predict financial outcomes like stock prices, cryptocurrency movements, and economic indicators.

🏛️ Political markets: Focus on political outcomes, including elections, policy changes, and government decisions.

🐯 Exotic markets: Cover a wide range of topics, such as weather predictions, entertainment outcomes, and social or cultural phenomena, offering the greatest potential for crypto innovation.

🏀 Sports markets: Enable betting on the outcomes of sporting events, like the winner of a game, final score, or player performances.

The most popular type of prediction market setup is the Binary Options model, which involves financial derivatives that allow participants to bet on yes/no or true/false event outcomes.

Traders predict if a specific event will occur by a set time, receiving a fixed payout if correct or losing their investment if wrong. Binary options offer a fixed risk/reward structure and an all-or-nothing outcome, making them popular for quick, decisive speculation.

These markets are often the easiest to resolve when there are clear market rules and a credible, easily-accessible outcome verification source.