This can be regarded as the basic gameplay of predicting the market.

This year's U.S. presidential election is extremely tight. Due to the epidemic, some voters voted by mail, adding additional uncertainty.

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1. Prediction markets and the US election

The November 4 tweet mentioned:

Regardless of who wins or loses, this time around, I think prediction markets are proven: they are more accurate than pre-election polls or forecasting models.

The model predicts a 90% chance of Biden being elected, while prediction markets show a 65% chance of Biden winning.

As proof, according to The Economist’s forecasting model, the probability of Trump’s re-election is only 4%, while on the Ethereum-based forecasting platform Polymarket, the gap between the two is not that big.

Of course, as the results of more electoral votes in swing states are announced, the results of the prediction market will also change accordingly. As of this writing, betting on Trump's re-election is priced at $0.17, while betting on Biden's election has risen to $0.83. In other words, the current market believes that the probability of Trump's re-election is roughly 17%.

A large number of users participated in the prediction of the election results through encrypted prediction markets such as FTX, Augur, Prediqt, and Polymarket this year. If you win, eat candy, if you lose, turn off the light and eat noodles.

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2. What is a prediction market?

In layman's terms, a prediction market is a derivatives market created based on clear and verifiable facts in the future. With the blessing of blockchain technology, the prediction market has acquired the characteristics of openness and credibility.

For example, who will be elected in the 2020 U.S. general election, which football team will win, and whether the price of Bitcoin will exceed $20,000 by the end of 2020? These problems occur at some point in the future, and the end result is clear and verifiable, not ambiguous.

In addition to the fact that events occur in the future and events can obtain clear verification results, prediction markets still involve transaction characteristics. Participants judge and bet on the outcome of future events. According to publicly provable rules, if the prediction is correct, they can make a profit.

During the 2020 U.S. election, multiple prediction market application platforms have launched the topic of predicting the next presidential candidate. Users who participate and predict correctly will be rewarded with cryptocurrency or fiat currency.Invest money to make a judgment, wait for the answer to be revealed, and then get rewarded or lose money based on the outcome. This is the most basic way to play the prediction market.

There is the possibility of black-box operations in the traditional prediction market. After all, the data may be tampered with by the project party, and the database may be attacked by hackers. With the help of the non-tamperable, open and transparent characteristics of the blockchain, the encrypted prediction market will also emerge.

Of course, blockchain-based prediction markets are not without limitations.

First, crypto prediction markets rely on oracles to provide certainty.Although the encryption prediction market can record the participation information of all parties in the public ledger, the prediction events targeted often occur outside the chain, and it is still necessary to use intermediaries or data oracles to provide data outside the chain to the blockchain. Blockchain application. Failure or malicious manipulation of the oracle machine will cause the prediction market to fail to operate normally. Often the prediction market needs to choose a reliable oracle machine service, or choose several oracle machine service providers to avoid a single point of failure.

Secondly, when there is a dispute over the results of the prediction topic, if the prediction market application does not have a suitable dispute resolution mechanism, it will also cause unpredictable results. In this U.S. presidential election, the cut-off time set in some prediction markets is too short, which will cause this situation. Because if Trump loses the election, he may try to make a comeback through litigation and other procedures, which will make the confirmation of the final result take longer.

Although the crypto prediction market is still in its nascent stage, the 2020 election has also attracted a large number of users for this type of application.Next, we look at five typical prediction market platforms.

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Can Trump be elected? The answer given by FTX’s prediction market is:

Can: 0.12; Can't: 0.88.

The Trump-2020 contract product of the digital asset derivatives trading platform FTX has been online for a long time. According to FTX's introduction:

TRUMP-2020 (hereinafter referred to as TRUMP) is a contract product launched by FTX. If Donald Trump wins the 2020 US presidential election, TRUMP will expire at $1, otherwise it will be $0. Similarly, other President-2020 contracts (President refers to the candidates for the 2020 U.S. presidential election) are also election series contract products launched by FTX. futures delivery, otherwise it is $0.

Due to the niche market, the market liquidity is often insufficient. However, it has developed in recent years. Among the prediction markets during the general election, FTX’s prediction market is one of the most liquid markets.

According to the statistics of the Coingecko platform,The Trump contract on the FTX platform has a 24-hour trading volume of about $8 million(The volumes of both TRUMPWIN and TRUMPLOSE are superimposed).

Theoretically speaking, the price of a TRUMP contract is approximately equal to the probability of Trump's re-election, and vice versa represents the probability of Trump's failure to be re-elected.

FTX has profited handsomely as prediction market volumes have increased. According to TheBlock, FTX may earn more than $1 million from the prediction contract.

Compared with decentralized crypto prediction markets, FTX’s prediction contract trading experience is slightly better. Like other digital asset transactions, the user enters the transaction price and quantity, and submits the order.

Since the way of use is familiar to everyone, there is not much introduction. It is worth mentioning that FTX added a note to the uncertainty of the final result of the US president: the possibility of recalculating the votes or appealing to the court exists. Therefore, although the third delivery condition in the contract is very close, it also provides more flexible options.

And if all the delivery conditions are not triggered before November 9, the contract will be delayed until February 2021 delivery. The uncertainty of delivery conditions is an issue that may be considered in the prediction market for the US general election this time.

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4. Augur, the earliest decentralized prediction market

In the Augur prediction market, how do you see Trump's chances of winning?

The price information of the market, the answer given is:

Yes: 0.15; No: 0.87.

Augur's prediction market is similar to FTX's gameplay. Take, for example, the predictive topic of the U.S. election. Augur created corresponding tokens (NO Trump Augur prediction token NTRUMP and YES Trump Augur prediction token YTRUMP). When the delivery conditions are triggered, for example, Trump cannot be re-elected, the price of NTRUMP tokens will be delivered at $1, while the price of YTRUMP tokens will be $0.

According to Lianwen's report on November 3, the transaction volume of the "2020 US election" market on the Augur platform has exceeded 5 million US dollars.

Augur is a decentralized peer-to-peer prediction market based on the Ethereum platform, allowing anyone to create a prediction topic and initiate a prediction market.The advantage of a decentralized prediction market like Augur is that it provides stronger stability and security, and the cost is low, eliminating the danger of the counterparty, and traders do not need to worry about the platform getting in the way.At the same time, because of decentralization, the platform cannot be shut down suddenly, and single point of failure is avoided.

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Can Trump be elected? The current Polymarket prediction market on this topic,Transaction volume reached $8 million.Under this topic, the current price given by Polymarket is:

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Polymarket data on November 4

Polymarket is an emerging prediction market platform that uses an automatic market maker mechanism, and the token used is USDC.Officially called the Information Marketplace: Polymarket harnesses the power of the free market to demystify important real-world events for you.

Among the hottest topics at present, the top six are all issues related to the US election.

V god praised Polymarket:

Try Polymarket now. What makes it special is that it is built on the Ethereum side chain of Matic Network and provides an optimized UI to attract users from outside the circle. There is also an option to buy USDC with a credit card.

The Polymarket experience is much better than traditional DAPPs, and there is no transaction fee. You can register directly with your email address without a decentralized wallet.

After logging in, if you want to participate in the market, you need to recharge USDC into the contract first, or purchase USDC directly with a bank card. Similarly, assets deposited in Polymarket can be redeemed at any time.

Once the deposit is successful, you can participate in the prediction. First click on "Markets" in the navigation bar at the top of the page, then scroll down to browse different markets by category, volume, liquidity, etc. Choose your preferred prediction market.

For example, after entering the Trump quiz market, you can directly purchase the corresponding shares.

Polymarket adopts AMM's automatic market maker method. Compared with FTX's order book trading method, it can directly trade without a counterparty, and the final price will be automatically determined by the market.

After submitting the order, it is equivalent to holding the corresponding position. There are two ways to take profits:

The picture above is an example after clearing.

Polymarket provides the trading experience and fluency of a centralized prediction market. Due to the use of the AMM mechanism, transactions can be executed immediately; with the help of Matic Network's side chain, there is no need to pay high transaction fees, and the transaction depth is not bad.

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Everipedia is the blockchain version of Wikipedia. A recent new move is to cooperate with the Associated Press and ChainLink oracle service providers to upload the results of the US election in real time and record them on the EOS blockchain.

In addition to this, the team also created an application platform for the prediction market: Prediqt.

Prediqt uses its own native token IQ as an asset to participate in the prediction market. The current trading volume is about 48 million IQ.

Prediqt allows users to create their own marketplaces. By submitting a series of information (such as transaction tokens, market names, descriptions, pictures, etc.), and setting the market's liquidation confirmation standards, arbitrators, delivery time and other information, you can create your own prediction market, with small partner to play.

       Of course, it is more common to directly participate in existing prediction markets.

Prediqt adopts two methods of order book and AMM to purchase the corresponding shares, and the default method is the order book method. The recently launched Uniswap-like platform Minswap provides a way for IQ tokens to buy Trump prediction tokens.

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7. Catnip based on Augur and Balancer

Finally, a small project, Catnip, is introduced. There is currently only one trading market: Whether Trump wins the 2020 presidential election can be regarded as an experimental project.

Catnip uses two prediction tokens (YTRUMP and NTRUMP) both from the Augur platform. However, unlike Polymarket, when using Catnip, it is a non-custodial method. You can log in and use it directly with the web3 wallet, and the obtained prediction market tokens are also directly deposited into the wallet.

Catnip created a trading pair with the help of Balancer. By combining Augur and Balancer, it can be regarded as a new attempt of DeFi + prediction market. The follow-up Catnip is also scalable. After all, Augur provides a prediction market, while Balancer provides liquidity. This approach uses Catnip as a prediction market entrance, backed by two established platforms, and can extend more interesting gameplay.

The current market trading volume is $7.58 million,8. Summary

This article sorts out several typical cases of blockchain prediction markets, which may inspire you. How to create your own crypto prediction market? How to get involved? This article can give you some answers.

Next, the launch process of Ethereum 2.0 is about to start. Maybe you can create a new prediction market. Guess, can the 0th stage of Ethereum 2.0 be created as scheduled? We don't know the answer, but we can listen to the wisdom of crowds in the prediction market.

ETH 2.0 Staking will be launched soon, about ETH 2.0, you can click:

1. When will the ETH2.0 Beacon Chain be launched? When will Staking be enabled? When will reward distribution start? "

Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.