Prediction markets

A space to discuss the ‘Prediction markets’ market sector available on Token Terminal.

What are prediction market protocols?

Prediction market protocols are smart contract-based protocols that allow for permissionless trading of information globally.

What problems do prediction market protocols aim to solve?

It’s traditionally been difficult to truly harness the global wisdom of the crowds. Internet-native prediction market protocols might make that possible.

How do prediction market protocols solve those problems?

Prediction market protocols bring down the cost of betting on information to one function call. Once a prediction market has been opened onchain, its outcomes are represented as freely tradable tokens on the blockchain.

Why is now the right time to build and invest in prediction market protocols?

The prediction market space was initially dominated by orderbook based solutions, most of which suffered from low liquidity. Prediction market AMMs that pooled liquidity emerged to solve this liquidity bootstrapping problem, and have since gone onto facilitating tens of millions in aggregate trading volume. Recently, we’ve seen the rise of prediction market protocols built on application-specific chains.

What is the business model of prediction market protocols?

The primary business model for prediction market protocols is to generate revenue by taking a cut of the trading fees paid by traders or bettors. That is, the prediction market protocols take a portion of the liquidity providers’ revenue.

Where can I view the current and historical (financial) performance of prediction market protocols?

Prediction markets dashboard: Prediction markets | Markets | Token Terminal

Methodology for prediction market-specific metrics

Total value locked: liquidity deposited into the prediction market’s trading pools.
Trading volume: trading volume on the protocol.
Fees: total trading fees paid by bettors.
Supply-side fees: share of trading fees that goes to the liquidity providers.
Revenue: share of trading fees that goes to the protocol (and its tokenholders).
Token incentives: value of governance tokens distributed to LPs and/or bettors.
Daily active users: daily distinct addresses making bets on the protocol.

Example project documentation

Relevant links