PredictX: Prediction Markets for DeFi

PredictX is a DeFi protocol that brings prediction markets to DeFi. Centered on automated liquidity and precisely designed incentives, PredictX ensures the best liquidity across all markets while allowing users to win off their predictions on a user-friendly platform.

3 min readFeb 3, 2021

Opportunities in the Existing Market:

Prediction markets are online platforms where individuals can set a price on the realization of a future event. These markets encompass a wide range of activities and events from sports betting, politics, to price predictions on stocks like TSLA, and even other events like albums releases, IPO’s, etc. For the average user or trader, a prediction market is an opportunity to make a profit off of the behavior of an event or asset. Sports betting a $200B+ industry is the most popular application of prediction markets, but there are also social markets like politics and global futures markets that are also in the several billions of dollars.

Challenges with Centralized Prediction Markets:

However, existing markets are highly centralized since centralized gatekeepers like sportsbooks, online betting platforms or applications exercise full control over what markets are offered along with having huge fees (3–10%) involved with each transaction. These centralized gatekeepers dominate the market and extract tons of value from the ecosystem. For example the best known prediction market for political betting, PredictIt, charges a 10% fee for all winnings. These fees make it almost impossible for users to consistently win on their predictions. Not only do centralized players charge exorbitant fees but they are also disincentivized to innovate on a model in which they profit enormously off the user. As a result, they focus their efforts on constantly acquiring new users to replenish the dying ecosystem.

Problems with Existing Decentralized Prediction Markets:

Plagued by high gas fees, minimal liquidity and poor UI, decentralized platforms like Augur and Polymarket among others have not attracted the volume like that of their centralized counterparts. A big part of this stems from the lack of liquidity, lack of decentralization (needing deposit and withdrawals), and lack of incentives. Incentives for users should be much higher in a decentralized model since there is no centralized middleman collecting massive fees for each transaction. The incentive design for PredictX will play a key role in maximizing the liquidity for markets and optimizing the incentives for all participants.

PredictX:

Inspired by decentralized prediction market protocols like Augur and Catnip, PredictX is the first DeFi protocol to fully integrate prediction markets on a decentralized platform where users can make predictions with speed and ease. PredictX prioritizes (1) the user experience (2) maximizing liquidity. Our end goal is to create a user-friendly prediction markets platform powered by a truly decentralized protocol that is easily integrated with other DeFi platforms and other blockchains like Polkadot. This means non-custodial, not centralized and open to everyone.

Our V0 is now live! Liquidity providers and users can now participate in our first prediction market.