A prediction market is an exchange-traded market where participants trade contracts whose payouts are contingent on the outcome of future events. The market price of these contracts can be interpreted as a collective probability assessment of the event occurring. In the crypto world, these markets are often decentralized and run on blockchain platforms. They provide a mechanism for aggregating information and forecasting outcomes.
Context
News frequently covers prediction markets in relation to political events, sports results, and even scientific discoveries, showcasing their utility for forecasting. Decentralized prediction markets face regulatory scrutiny concerning their classification and legality in various jurisdictions. Their ability to incentivize truthful information reporting makes them a subject of interest for both data aggregation and decentralized governance.
Regulatory clarity establishes a new precedent for on-chain event betting, dramatically expanding the total addressable market for decentralized finance.
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