Definition ∞ Futarchy markets are a governance mechanism where decisions are made based on the outcomes predicted by prediction markets. Instead of directly voting on policies, participants bet on the likely success of different policy proposals, with the policy predicted to yield the best results being automatically implemented. This system aims to leverage collective intelligence for more effective governance by incentivizing accurate forecasting. It seeks to align decision-making with measurable outcomes rather than subjective preferences.
Context ∞ While still largely theoretical or in early experimental stages, futarchy markets appear in crypto news and academic discussions as a potential future governance model for decentralized autonomous organizations (DAOs). Proponents suggest they could improve decision quality by linking policy choices to quantifiable metrics. However, concerns persist regarding market manipulation, the difficulty of defining clear success metrics, and the practical challenges of integrating such a system into complex protocols.
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