At the intersection of DeFi and information exchange lies the Prediction Market: an area where traders can leverage their knowledge of the past, present and future to forecast specific, real world outcomes.
The ability to profit off of information exchange and modeling has formed the basis for much of modern capital markets.
With the rise of DeFi, traders are finding yield through decentralised exchange, lending, farming and providing liquidity for others to use. No current player in the market combines DeFi with prediction markets, until now.
Currently, existing prediction markets suffer from key problems such as lack of liquidity & markets, lack of traders, and duplicate or confusing markets. Total prediction market volume averaged less than $1M USD per day in 2020 and even less in years prior.
With such low volumes, it is impossible for traders to adequately hedge against future outcomes or take any sizable positions.
With low volumes comes low liquidity and therefore low fees for platform providers due to the lack of active traders. A death spiral ensues as we have seen with existing prediction markets with virtually no users or daily volume.
Polkamarkets aims to solve the low usage & volume problems by incentivising liquidity providers and traders to facilitate & take large positions, while a system for curation and resolution ensures efficient and trustworthy markets. The platform will also leverage tried and tested DeFi incentives such as liquidity mining and yield farming to incentivise daily active use.
As an “Entertainment DeFi Platform", Polkamarkets will offer Sports and Esports daily markets with live feeds of events alongside forecasting. Users will be able to watch their favorite teams play while making live, in-play forecasts about the game’s outcome.
Live odds and automated market makers will dynamically adjust odds based on users’ forecasts on the markets. As users trade outcome fractions, they will mine $POLK tokens that they can later use to open their own prediction markets on Polkamarkets.