A prediction market is a type of financial market that allows participants to trade tokens/shares whose payoffs are based on the outcome of future events. These markets are designed to aggregate information and opinions from a diverse group of participants to generate predictions about the likelihood of specific events occurring.
In a prediction market, participants can buy and sell tokens/shares representing different outcomes of a particular event, such as the outcome of an election, price predictions of various assets or the occurrence of a an unlikely event.
Prediction markets are considered valuable tools for forecasting because they harness the collective wisdom of participants, incorporating a wide range of perspectives and information. They have been used for various purposes, including political predictions, economic forecasts and risk management.
Key benefits of Prediction Markets on the Earn Network:
Driven by the Community
Market Creators are able to create their own market & denominate it in any token they want. They can set their own fees and conditions to provide the most efficient/popular market for audiences. They will pay in $EARN to create the market.
Stakers can do cross chain transactions with ease on any market they wish to participate in with the use of $USDT and the $EARN token. With the use of $EARN, they are able to receive more shares in the market that would increase their chances of winning.
Market Validators will act as oracles resolving the market outcome (essentially by providing the correct answer). By performing this action they will be rewarded with part of the market fees. They must hold $EARN to participate as a Market Validator.
Appellants can appeal the chosen market outcome that was determined by the consensus of Market Validators. Anyone can become an Appleant if they belive that the outcome of the market was chosen incorrectly. To make an appeal they require the $EARN token. If a successful appeal happens they will gain the $EARN stake of a Market Validators who answered incorrectly.
Cross-chain capabilities: The infrastructure on which Prediction Markets are built supports cross-chain transactions that will help anyone participate.
No initial liquidity requirement to create the market: Although it's beneficial for the Market Creator to add some initial liquidity to their market, it's not mandatory. This helps Market Creators have low requirements to kick start their journey, focus on promotion and create many potential markets.
Multiple outcomes supported: Not only are binary options supported. With the initial release, multiple outcomes can be determined such that you can create a more robust market.
New, huge market opportunities: We purposely decided not to rely on automated oracles since that would greatly limit the possibilities of what markets can be created. Local, undiscovered, opportunistic markets can be nurtured by anyone, anywhere and most importantly answered by anyone. Example: If you're living in Turkey and there's a popular reality show where 1 participant leaves the show with each new episode, you could create a market for your local audience: "Who's going to leave the show on episode 7 of [Reality Show Name]?".
Alternative to standard regulated betting markets: On-chain, decentralised prediction markets posess a massive advantage since the whole process, from market creation until the resolution of it, relies purely on the peer-to-peer.