Roulette Style Prediction Markets
Websites that allow you to bet on the future have exploded this year and most of them work in a similar way. You get a question about whether an event is going to happen in the future and then you can trade around a Yes or No decision up until the point it’s resolved. This is cool shape that’s taking off but it comes with tradeoffs and limitations.
For instance, what would a prediction market look like if you could bet on an event happening at a specific time down to the second? Or a time deep into the future? This kind of prediction market isn’t possible with the style of market that Polymarket uses as you’d have infinite options into the future (and thus liquidity collapse) so you need to go back to the drawing board for a different approach.
One way to approach is to take inspiration from roulette but with a twist: instead of betting against the house on numbers, you're competing with other players to pinpoint when a future event will happen.
How it Works:
Create a prediction: Something like "Starship Booster successfully caught by Mechazilla", and assign a trusted resolver.
Bet: Users place bets on a specific month, day or second when they believe the event will occur.
Grow the Prize Pool: All bets contribute to a shared prize pool.
Resolve: When the event happens, the resolver confirms the exact time.
Payout: All who have that time covered receive proportional payouts from the prize pool.
Advantages
Precision: Allows for extremely granular predictions.
Timescale: Suitable for events happening today or far into the future.
Jackpots: A small bet could yield a massive return.
This is a broad shape and there are plenty of tradeoffs and questions. Like, how will the proportional payout work? How do you reward those who cast their predictions before others? How do you build more transparent and flexible resolvers? How could you introduce elements that make the market more positive sum?
And what questions aren’t we asking?
We’ve been thinking about the questions above and releasing related experiments for a little while now but this is a more advanced shape to explore. To better organize, we’ve created a new Farcaster channel to share updates and talk through the various challenges this kind of market poses. If you’re intrigued by prediction markets or have thoughts on this one, we’d love to hear from you.
Shoutout to Jacob.eth who planted the seed for a positive sum prediction market in his Prophecy Market post and Packy McCormick who expanded it in his post Startup Prophecies.