From the Ethereum prediction market to see the shocking reversal of the US election
Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc)Editor's Note: This article comes from
Babbitt Information (ID: bitcoin8btc)
Babbitt Information (ID: bitcoin8btc)
, Author: James Beck, Compile: Overnight Porridge, published with permission.
Note: The original text is from James Beck of ConsenSys. The translator has updated the data involved in the article to reflect some changes in the current market. As of now, the results of prediction markets including Augur, Polymarket, Omen, etc. are displayed as follows: Trump has a better chance of winning the 2020 US presidential election.
In James Surowiecki's book, The Wisdom of Crowds, begins with a story about the British scientist Francis Galton, who, on a crisp autumn day in 1906, Leighton went to a fun fair where the crowd could guess the weight of a bull. At the time, Galton believed that the average estimate of the masses should be far from the actual weight of the cattle, and he believed that the answers of farmers and butchers would be more accurate. But it turned out to impress him: Under the right circumstances, groups tend to be smarter than the smartest people in them. In fact, the average result of all the crowd's 787 guesses was 1,197 pounds, while the actual weight of the cow was 1,198 pounds. In other words, the crowd's guess was nearly perfect.
What caused the average guess of a county fair crowd to correctly guess the weight of a bull? According to Surowiecki, intelligent people have four characteristics:
Diversity of opinion: everyone should have some private information, even if it's just a wacky interpretation of a known fact;
Independence: People's opinions are not determined by those around them;
Decentralized: people are able to specialize and leverage local knowledge;
Aggregation: there are mechanisms for translating private judgments into collective decisions;
Surowitzki's idea was based on a statistical principle: If you ask a sufficiently large and distinct group of people to make a prediction, or estimate a probability, and then average those estimates, then each of them is Mistakes made in arriving at the answer are automatically canceled out. Sorowitzki speculated: "Everyone's guess has two components—information and error, and after subtracting the error, you get the information." Ethereum's own characteristics laid the foundation for mobilizing the wisdom of the crowd One of the first applications proposed by Vitalik Buterin in the Ethereum white paper is the prediction market, and Augur and Gnosis are two of the most well-known prediction market applications.
And nearly 5 years after Ethereum launched, how are these prediction market applications performing?
Can prediction markets be more accurate than polls?
First, it is important to note that prediction markets are not a recent invention, in the long history of political betting markets Paul Rhode and Koleman Strumpf describe Wall Street betting markets during the Civil War that were wrong in only one of 15 presidential elections between 1884 and 1940. The Iowa Election Market (IEM) is outperforming major national polls, according to a University of Iowa study.
While prediction markets work well, they haven't always been that way. PredictIt, another popular election market, did not predict Brexit, nor did it predict Trump's victory in 2016. On the eve of the 2016 election, prediction market aggregator PredictWise gave the following results: Hillary Clinton has an 89 percent chance of being elected president, while Republican Trump has an 11 percent chance of winning.
Obviously, the wisdom of the masses is not necessarily accurate.
Today, the global people’s interest in predicting the US election has reached a record level. On the Ethereum prediction platform, the forecast transaction volume on the Augur platform alone exceeded 6.8 million US dollars.
So, do these Ethereum-based prediction markets meet the conditions of the intelligent crowd described by Surowitzki, namely diversity of opinions, independence, decentralization and aggregation?
1、Omen
The performance of the three major Ethereum prediction markets
I tried three new Ethereum-based prediction markets - Polymarket, Omen, and Catnip to see how sensible they end up being.
(Disclaimer: Different jurisdictions have different laws when it comes to prediction markets, so you'll need to research further to make sure it's legal to participate in the market.)
Markets: "Will Biden win the 2020 US presidential election?"
Yes: 44.52% No: 55.48%
2、Polymarket
The first prediction market I checked was Gnosis’ Omen market, which has a very intuitive user interface and only needs to approve a transaction once connected to a MetaMask wallet, which costs about $2.
If a user thinks Biden will win, he can choose the "yes" option, otherwise he can choose "no".
The "Trade History" shows the sum of voting changes over the entire market life cycle. On Aug. 23, a notable shift saw 59% predict Biden would lose, but by Sept. 8, the collective results swung back to Biden, when it showed a 64% chance of Biden winning. The market has remained somewhat steady since then, with 60% calling for Biden to win and 40% for Trump. But today, the situation has changed again. The current market forecast is that Trump has a greater chance of winning.
Markets: "Will Trump win the 2020 US presidential election?"
3、Catnip
Yes: $0.7 No: $0.3
Polymarket's user interface is also very intuitive, and it guides users through a tutorial showing how to make a forecast. I have a slight gripe with this app though, to join a prediction market, users have to buy or deposit USDC in Polymarket instead of simply connecting to your MetaMask wallet.
Like the Omen prediction market, Polymarket's prediction results also ushered in a 180-degree change today. The current prediction results are: Trump has a greater chance of winning.
Markets: "Will Trump win the 2020 US presidential election?"
Yes: $0.691 No: $0.309
Catnip is a prediction market built on Augur and Balancer that promises ultra-low fees and is 100% non-custodial and decentralized. The only market currently available on the app is "Will Trump Win the 2020 U.S. Presidential Election?" It should be noted that this market will not be settled until after January 22.
You can easily access the app through your MetaMask wallet and choose the supported outcome, either yTrump or nTrump, for "yes" and "no," respectively. Unlike Omen and Polymarket, these yTrump or nTrump tokens are sent directly to your MetaMask wallet.
Similarly, the current forecast given by the Catnip market is: Trump has a greater chance of winning.
Are the prediction results of the Ethereum prediction market credible?
Of the four considerations for gathering useful crowd wisdom, Ethereum prediction markets have the advantage of aggregating decentralized inputs and reliably determining winning and losing bets.
