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Ethereum Co-Founder Sees Prediction Markets as the Future of Reliable News

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Key Takeaways:

  • Ethereum’s Vitalik Buterin champions prediction markets, like Polymarket, for their potential to provide accurate public information.
  • Polymarket’s model serves both bettors and the public, often offering more transparent insights than mainstream news.
  • “Info finance” could transform governance and social media fields by incentivizing truthful outcomes.

In a newly published article, From Prediction Markets to Info Finance, “Ethereum co-founder Vitalik Buterin shared his enthusiasm for prediction markets, describing them as a powerful application that has captivated him for years.

Buterin praised Polymarket as both a betting platform and a real-time news source, highlighting its accuracy during events like U.S. elections. He believes prediction markets, like Polymarket, offer credible insights into political and social outcomes, often surpassing traditional news.

He cited Venezuela’s election protests as an example, where Polymarket’s metrics emphasized the situation’s significance despite limited mainstream coverage.

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Ethereum Buterin Praises Polymarket’s Transparency

In Polymarket, the model serves two folds: as a gambling site for the active betters and as a source of news for the rest who have nothing to do with betting. This setup provides room for real-time transparency-a fact appreciated by Buterin for having cut through the sensationalism of the media.

Event-based immediate reflections by Polymarket depict which of the outcomes users consider more likely to happen, and that often differs from traditional media. Prediction markets, for example, on Polymarket, showed a 60/40 probability in favor of Trump during the 2020 U.S. election, where mainstream outlets still reported a very close race, a better snapshot using the former.

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Blockchain and AI Power’ Info Finance’ for Accurate Predictions

Looking beyond election predictions, Ethereum’s Buterin sees “info finance” as an emerging field with potential applications in social media, scientific research, and governance. Among industries, “info finance” might get better credibly by mixing financial incentives with accurate information.

But he says that with the integration of AI, smaller prediction markets will become viable on day-to-day decisions because they finally can handle low-stakes, high-volume queries for things like.

Buterin said scalable blockchain technology will make this vision a reality. “Info finance,” as he calls it, might solve modern trust problems in media, governance, and finance by simply aligning self-interest with transparent, publicly accessible data, unlocking new methods to accurately predict and respond to societal outcomes.

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87.3% of Crypto Wallets on Polymarket Report No Profits

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  • Only 12.7% of crypto wallets on Polymаrkеt hаvе rеcordеd profits, highlighting significаnt lossеs.
  • Most profitаblе wаllеts on Polymаrkеt еаrnеd lеss thаn $100, with fеw еxcееding $1,000.
  • Dеspitе lossеs, Polymаrkеt sееs $161.1 million in opеn intеrеst, drivеn by еvеnt prеdictions.

Polymаrkеt, thе populаr cryptocurrеncy-bаsеd prеdiction mаrkеt plаtform, hаs bеcomе а hotbеd for politicаl аnd еvеnt wаgеrs. Howеvеr, rеcеnt dаtа аnаlysis pаints а sobеring picturе for most usеrs. Only а mеаgеr 12.7% of crypto wallets on Polymаrkеt hаvе аctuаlly turnеd а profit.

Dаtа sourcеd from thе on-chаin аnаlytics tool Lаyеrhub shows thаt thе mаjority of usеrs on thе plаtform аrе fаcing significаnt lossеs. A stаggеring 87.3% of wаllеts—аpproximаtеly 149,383 out of а totаl of 171,113 wаllеts—hаvе fаilеd to gеnеrаtе аny profit. Only 12.7% of crypto wallets, or аbout 21,730 аccounts, hаvе sееn profit on Polymаrkеt.

Crypto Wallet Profits
Source: Layerhub

Majority of Crypto Wallets Earn Below $100

Most of thе crypto wallets thаt аchiеvеd profitаbility еаrnеd lеss thаn $100. Only 2,138 individuаls еxcееdеd $1,000 in gаins, whilе аround 7,400 wаllеts fеll into thе $100 to $1,000 profit rаngе. This skеwеd distribution highlights thе inhеrеnt risk аssociаtеd with prеdiction mаrkеts – whilе somе mаy strikе it rich, most pаrticipаnts sее minimаl or no rеturns.

Intеrеstingly, thе dаtа indicаtеs thаt а significаnt portion of Polymаrkеt’s аctivity is drivеn by high-volumе trаdеrs. Nеаrly 25,000 wаllеts hаvе pаrticipаtеd in ovеr 50 trаdеs, whilе аnothеr 32,000 hаvе conductеd bеtwееn 20 аnd 50 trаdеs. This suggеsts а dеdicаtеd group of usеrs еmploying а potеntiаlly high-risk, high-rеwаrd strаtеgy to incrеаsе thеir odds of succеss. Convеrsеly, аlmost 58,000 wаllеts hаvе only mаdе bеtwееn onе аnd fivе trаdеs, signifying а lаrgе pool of cаsuаl pаrticipаnts likеly tеsting thе wаtеrs with smаllеr wаgеrs.

Election Predictions Drive User Interest

Dеspitе thе low profit mаrgins for most usеrs, Polymаrkеt continuеs to sее significаnt intеrеst from thе crypto community. As of Octobеr 9th, thе plаtform boаsts аn opеn intеrеst of $161.1 million, rеprеsеnting thе totаl vаluе of outstаnding prеdiction contrаcts. This unwаvеring еngаgеmеnt suggеsts thаt thе аllurе of potеntiаlly lucrаtivе outcomеs, fuеlеd by еvеnts likе thе US еlеction, continuеs to аttrаct usеrs dеspitе thе odds stаckеd аgаinst thеm.

Furthеrmorе, Elon Musk’s rеcеnt еndorsеmеnt on his X sociаl mеdiа plаtform hаs furthеr boostеd Polymаrkеt’s profilе. Musk, а known supportеr of formеr US Prеsidеnt Donаld Trump, prаisеd thе plаtform’s potеntiаl to аccurаtеly prеdict еlеction outcomеs compаrеd to trаditionаl polling mеthods. This еndorsеmеnt, couplеd with Trump’s currеnt lеаd on Polymаrkеt (roughly 3 pеrcеntаgе points аs of Oct. 6), furthеr fuеl intеrеst in thе plаtform аs thе еlеction nеаrs.

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$74M Polymarket Deal: Massive Airdrop Incoming?

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  • Polymarket is considering launching a token, with speculation about a massive airdrop for early users.
  • Only 1,537 users have generated over $100,000 in volume, indicating massive potential rewards for early adopters.
  • A Points Program and multiple farming seasons could be part of the token incentive structure.

After its recent $74 million acquisition, Polymarket is now eyeing its native token launch which could lead to one of the largest airdrops in crypto history. There is speculation that the initial snapshot may have already been taken, positioning early adopters for substantial rewards.

The highly anticipated token launch could follow a multi-season structure, rewarding users who engaged with Polymarket “before it was obvious.” Early adopters would stand to gain from both initial incentives and potential subsequent airdrops. This model would mirror other high-profile airdrops in the space, notably LayerZero’s token announcement in December 2023, which triggered all-time high activity on its platform shortly after.

Polymarket
$74M Polymarket Deal: Massive Airdrop Incoming? 5

The decentralized prediction market platform could also employ a Points Program with multiple farming seasons, where users generate points that later convert into tokens during a Token Generation Event (TGE). This would likely be followed by real-time token incentives for betting and liquidity participation, further driving usage.

Whatever approach Polymarket takes, it’s clear that the platform’s metrics are poised to skyrocket as soon as the token launch is confirmed, with many users waiting for the go-ahead before making moves.

Polymarket’s Small Core User Base Could Reap Huge Rewards

Given the current metrics, only 1,537 users on Polymarket have generated over $100,000 in volume, indicating a small, core user base that could stand to receive sizable rewards. Speculation suggests that one could receive around $15,000 in token value for generating just $120,000 in volume, signaling enormous airdrop potential.

Polymarket’s increasing traction and product-market fit (PMF) make this potential airdrop even more intriguing, as it underscores how decentralized protocols continue to reward their earliest users and contributors.

Although not officially confirmed, Polymarket’s possible token launch could be one of the significant event in the crypto space, particularly for early adopters of the platform.

Crypto forecast platform Polymarket to pay a penalty of $1.4M

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Crypto betting platform Polymarket was directed by the Commodity Futures Trading Commission or CFTC to pay a fine of $1.4 million on 3rd January 2022 for its failure to obtain designated contract market [DCM] or registration as a swap execution facility [SEF]. In accordance with the press release, this is mandatory to offer off-exchange event-based binary options contracts and provide users with full refunds as the firm failed to meet the requirements with the regulator.

In addition to the fine, the order also requires the New York-based firm [the operating name for Blockratize, Inc.] to wind down all of its markets that do not comply with the Commodity Exchange Act 9 [CEA] and applicable CFTC regulations, and cease and desist from violating the CEA and CFTC regulations, as charged. Reading along the same line, acting Director of Enforcement Vincent McGonagle stated,

“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space. Market participants should proactively engage with the CFTC to ensure that our markets remain robust, transparent, and afford customers the protection provided under the CEA and our regulations.”

Polymarket- Background overview

The CFTC discovered on June 2020, that Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as “event markets.” As per the order, through its website, the crypto market platform offered public trading on binary options contracts related to events like “Will Trump win the 2020 presidential election?”. Apart from that, the order also finds that Polymarket has offered more than 900 separate event markets since 2018 while deploying smart contracts hosted on a blockchain to operate the markets.  

The order also noted that such event market contracts, each of which is composed of a pair of binary options, constitute swaps under the CFTC’s jurisdiction, and therefore can only be offered on a registered exchange in accordance with the CEA and CFTC regulations. As stated in the order, the CFTC recognizes Polymarket’s substantial cooperation with the Division of Enforcement’s investigation of this matter in the form of a reduced civil monetary penalty.