Definition ∞ Peer prediction is a mechanism designed to elicit truthful information from agents in situations where external verification of their claims is difficult or impossible. It rewards agents based on how well their predictions or reports align with those of other participants, assuming a collective incentive for accuracy. This system aims to overcome individual incentives for misrepresentation. It finds application in decentralized data markets and reputation systems.
Context ∞ In the cryptocurrency and Web3 domain, peer prediction mechanisms are explored for decentralized data marketplaces, oracle networks, and reputation systems. News reports might discuss protocols leveraging peer prediction to aggregate reliable data for smart contracts or to assess the quality of information providers. This approach seeks to build trustworthy data sources in environments without central authority. Its development is relevant for improving data integrity within decentralized applications.