Prediction Market
Decentralized marketplace for betting on future events.
Beginner-friendly explanation
A prediction market is a place where people bet on future event outcomes, like an election or Bitcoin's price. The more likely an outcome is perceived, the higher its price.
Example:
A market predicts a 70% chance Bitcoin will be above $30,000 by December.
Intermediate-level insight
A prediction market uses smart contracts to gather bets and automatically distribute winnings. These markets help gauge social consensus on political, economic, or sports events.
Example:
On Augur, users create a market “Will Ethereum surpass $5,000 by 2025?” and bet Yes or No.
Advanced perspective
Decentralized prediction markets leverage the wisdom of crowds to produce probabilistic estimates. Incentive mechanisms like AMMs (Automated Market Makers) ensure liquidity. Risks include market manipulation, low volume bias, and regulatory challenges.
Example:
A DeFi protocol integrates prediction markets by combining binary outcomes with liquidity curve models (e.g., Gnosis Conditional Tokens).
NFT DeFi Web3
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