Decentralized prediction markets are blockchain-based platforms where users bet on future events without intermediaries. Here’s what you need to know:

Key features:

Popular platforms:

Challenges include legal uncertainties, data reliability issues, and potential market manipulation. Despite limitations, these markets show promise for predicting outcomes in finance, politics, and other fields.2. Basics of decentralized prediction markets2.1 DefinitionDecentralized prediction markets are online platforms that use blockchain technology. They let people bet on future events without middlemen. These markets use group knowledge to guess how likely different outcomes are. They work on blockchain, which makes them open, unchangeable, and hard to shut down.Key parts of decentralized prediction markets:

2.2 Main featuresDecentralized prediction markets have several key features:

These features make prediction markets more open and fair. People can bet on many things, from politics to money, while staying private and safe.Blockchain makes sure bets can’t be changed once placed. This helps users trust the system more.Many of these markets have their own tokens for betting. This lets them work well with other blockchain money apps, making them more useful.3. How these markets operate3.1 Blockchain and smart contractsDecentralized prediction markets use blockchain and smart contracts to work on their own and openly. Blockchain keeps a record that can’t be changed, showing all market activities. Smart contracts are computer programs that run the market without needing people in the middle.Here’s how blockchain and smart contracts help these markets:

Smart contracts also set up new markets and decide who wins bets based on real events.3.2 Using tokens to join inTo join these markets, you usually need special tokens. These tokens do different jobs:

Using tokens helps these markets work well with other online money apps.3.3 Starting and ending marketsHere’s how markets start and finish in these systems:

This way of doing things is fair and doesn’t need people to run it. But it’s important that the info about what really happened is correct.4. Parts of decentralized prediction markets4.1 Who’s involvedDecentralized prediction markets have several key players:

4.2 Oracles and data sourcesOracles are important in these markets:

Types of oracles:

The type of oracle used can affect how much people trust the market.4.3 How decisions are madeHere’s how things work in these markets:1. Starting a market:

2. Betting time:

3. Finding out what happened:

4. Giving out money:

5. Big choices:

This way of doing things helps keep everything open and fair, without needing someone in charge.5. Benefits of these marketsDecentralized prediction markets have several key advantages over regular ones:5.1 Hard to stop or controlThese markets are spread out, making them tough to shut down:

This lets people bet more freely on many different things.5.2 Open for everyoneAnyone can use these markets:

More people joining means better guesses and more money in the markets.5.3 Cheaper and more money to tradeThese markets can save users money:

All this makes trading cheaper and easier for everyone.5.4 Clear and unchanging recordsBlockchain keeps everything open:

This openness makes people feel better about using the market.6. Problems and limitsDecentralized prediction markets have some issues and limits:6.1 Legal concernsThese markets often face legal problems:

6.2 Data problemsGetting the right information is key:

6.3 Market cheating risksThese markets can still be tricked:

6.4 New tech issuesAs a new system, these markets face some problems:

These issues need fixing for more people to use these markets and for them to work better.7. Well-known platforms7.1 Top platformsTwo big names in decentralized prediction markets are:1. Polymarket

3. TotemFi

7.2 How they compareHere’s how Augur, TotemFi, and Polymarket stack up:

Augur lets users create their own markets and has low fees. This is advantageous for those who want to bet on a variety of topics.TotemFi doesn’t take your money if you guess wrong and pays out in Bitcoin, which can be appealing to some users.Polymarket operates on Ethereum with Polygon Layer-2, allowing bets on a wide range of real-world events. Users can earn USDC, and the platform is known for its scalability and reduced transaction costs.Both Augur and TotemFi have unique features that cater to different user preferences, while Polymarket stands out for its technological enhancements and broad event coverage. As more people use these markets, we can expect further improvements and innovations.8. Real-world usesDecentralized prediction markets are used in many areas. Let’s look at how people use them.8.1 Guessing money trendsPeople use these markets to guess what might happen with money. They can help:

Traders can use this info to make choices about buying and selling.

8.2 Betting on politicsThese markets are good for guessing about politics. People bet on:

Sometimes, these markets guess better than regular polls.8.3 Sports bettingSports fans like these markets because:

8.4 New ways to check for problemsCompanies use these markets to spot possible issues. They help:

As more people use these markets, we might see them used in new ways. They’re good at getting many people’s ideas quickly and clearly.9. Effects on old-style marketsDecentralized prediction markets are changing how regular markets work. Let’s see how they’re making things different.9.1 Changing regular platformsThese new markets are making old ones change:

9.2 Making markets work betterNew markets are helping all markets do better:

Here’s how new and old markets compare:

As these new markets grow, they’ll keep making all markets better. This helps everyone who uses them.10. What’s nextLet’s look at what’s coming for decentralized prediction markets and how they might change things.10.1 New tech improvementsNew tech will make these markets work better:

These changes will help more people use these markets.10.2 Working with other online money toolsPrediction markets will work with other online money tools:

This will give users more ways to use prediction markets.10.3 More uses in different areasThese markets will be used in new ways:

As these markets grow, they’ll help people make choices and plan in many areas.The future looks good for decentralized prediction markets. They’ll likely get better tech, work with more tools, and be used in new ways. As rules change, finding a balance between new ideas and following laws will be important for these markets to keep growing.11. Wrap-up11.1 Main pointsDecentralized prediction markets are changing how we use group knowledge. Here’s what’s important:

These markets are changing how we make choices, handle risks, and plan for the future in many areas.11.2 Role in future moneyDecentralized prediction markets will be big in how we handle money:

As these markets grow, they’ll help us make smarter choices about money and other things. They’ll change how we look at what might happen and deal with risks in our connected world.FAQsWhat are DeFi prediction markets?DeFi prediction markets are online platforms where people bet on future events. They use blockchain to work without middlemen. Here’s what makes them special:

Two well-known DeFi prediction markets are:

These markets cover many topics like sports, politics, money trends, and world events.People use DeFi prediction markets because:

As more people use these markets, they might change how we think about betting and guessing future events.