Chainfeeds Summary:
This report systematically outlines the principles, technical architecture, current landscape, and future innovation directions of prediction markets, explaining why they can generate reliable probability signals with higher efficiency, and analyzing the rise of the Polymarket–Kalshi ecosystem and the next generation of product forms.
Article source:
https://x.com/FourPillarsFP/status/1999036448742183199
Article Author:
Ponyo : : FP
Opinion:
Ponyo: FP: 1) Prices in prediction markets are not merely trading outcomes, but rather a condensed representation of participants' true judgments about the future, based on public probability signals they are willing to back with capital. 2) Because monetary incentives compel people to express genuine beliefs rather than verbal opinions, prediction markets often produce more accurate signals than polls and expert commentary. 3) These markets operate most effectively when information is continuously updated, participation is frequent, and events themselves have real economic or social impact. 4) Unlike gambling, whose outcomes are detached from reality, prediction markets transform "betting" into an information production mechanism whose output can be reused and analyzed. 5) Prediction markets also remove probabilistic exposure from the complex derivative structures of traditional finance, allowing people to express uncertainty in a clearer and more direct way. 6) Trading volume, open interest, and user activity all indicate that prediction markets have achieved product-market fit, with Polymarket and Kalshi forming the core liquidity and participation centers of the ecosystem. 7) As major consumer platforms integrate prediction markets into their product processes, the focus of value capture is shifting from exchange infrastructure to the distribution layer that controls user traffic. 8) The future path depends on addressing the vulnerabilities of oracles, improving the capital efficiency of long-term markets, and introducing leverage primitives that can expand ways of expressing beliefs.
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