What Are Prediction Markets? Understanding How Myriad Works – Decrypt

On-chain prediction markets reminiscent of Myriad, launched by Decrypt’s father or mother firm DASTAN, have quickly gained traction in recent times, enabling customers to wager on the outcomes of occasions such because the U.S. Presidential election.

So what are prediction markets, and the way do they differ from standard prediction markets? Learn on to search out out.

What are prediction markets?

Prediction markets have existed in a single type or one other for the reason that sixteenth century. They permit customers to invest on the result of any future occasion—so long as somebody has arrange a marketplace for it.

Customers can try and predict the result of sporting occasions, elections, authorized instances, and something with a transparent or provable consequence. The core idea could be very easy: in case your prediction is correct, you win cash. In case you’re fallacious, you lose the cash you place as much as again your prediction.

The mechanics that underpin them are deceptively easy. The value of 1 “share” in a prediction market ranges from between $0.00 to $1, and its value correlates to its proportion probability of profitable, or its “odds.”

For instance, if a share for one candidate in an election prices 63 cents, that candidate has a 63% probability of profitable, in keeping with this particular market. If you wish to predict the result of the election, you’d purchase shares of whichever candidate you suppose will win. When the election is over, the market will resolve, and the value will go to $1.00 per share for whichever candidate received. The decrease the chances of one thing occurring, the cheaper making predictions on it’s going to turn out to be, and vice versa.

There are a number of several types of prediction market.

Binary markets are markets with two choices that can resolve to both $1 or 0 (sure, or no), reminiscent of “Will it rain on Monday of subsequent week”?
Categorial markets are markets with a number of choices, reminiscent of “Who will win the U.S. Election in 2024?”
Scalar markets are markets that resolve primarily based on whether or not one thing is increased or decrease than a specified sure, reminiscent of “Will the inhabitants of the U.S. be increased or decrease than 333 million in its subsequent census?”

When taking part in a prediction market, you’ll be able to promote your shares at any time. There’s no lockup interval, and also you aren’t required to attend till the occasion being speculated on has come to a conclusion.

Persevering with with the election instance, in the event you believed that one candidate was going to completely crush the opposite in an upcoming debate, you would purchase that candidate’s tokens, anticipating them to go up in value after the talk, and promote them as soon as the talk concluded. The chances, and subsequently the value of every share, are consistently altering in real-time, as a result of they’re free markets, managed solely by the provision and demand of every share.

Equally, when betting on a sporting occasion, the chances will doubtless change in real-time as the sport progresses, and the rating modifications.

On-chain prediction markets sometimes use oracles, which take off-chain, real-world knowledge and make it usable on a blockchain, to find out the result of an occasion and resolve disputes. For instance, a decentralized prediction market can use an oracle to let anybody submit proof of an consequence, whereas anybody can problem it.

How does Myriad’s decentralized prediction market work?

Created by DASTAN, the father or mother firm of Decrypt and Rug Radio, Myriad is an on-chain prediction market.

There are two fundamental fashions for guaranteeing liquidity in an on-chain market; order books and automatic market makers (AMMs). AMMs use a mathematical formulation to cost belongings,the place order books match patrons with sellers primarily based on their orders, by a centralized alternate methodology.

Myriad’s prediction market makes use of an AMM mannequin; as a result of AMMs don’t depend on a counterparty to match orders, they will operate even when there’s low liquidity. Any person can present liquidity for any market—versus centralized prediction markets, the place solely the centralized market maker is chargeable for offering all liquidity.

Advocates of on-chain prediction markets spotlight the truth that as a result of they will soak up liquidity from wherever, they have an inclination to have a lot liquidity than their options.

On-chain prediction markets like Myriad use incentives to draw liquidity.

When a person participates in a prediction market on Myriad, they obtain shares in that market, which could be traded whereas the market stays open—enabling them to enter and exit with markets that settle over a very long time horizon.

Myriad’s fixed operate ensures that the variety of shares in a market’s liquidity pool at all times stays fixed. When an imbalance is launched by including or eradicating shares to a liquidity pool, the value of outcomes in the marketplace change, and shares are redistributed between the dealer or liquidity supplier, and the share swimming pools.

The way forward for prediction markets

Mainstream media has more and more appeared to prediction markets as a official technique of predicting outcomes, with media retailers just like the Wall Road Journal and Newsweek reporting on prediction market odds alongside conventional polls.

Myriad, DASTAN’s on-chain prediction market, goals to supply a brand new mannequin for the media ecosystem, integrating with media retailers reminiscent of Decrypt and Rug Radio to making a dynamic participatory mannequin that, stated DASTAN President Farokh Sarmad, realigns incentives “from the underside again up.”

Based on DASTAN CEO Loxley Fernandes, Myriad permits customers to “take part within the creation of the information cycle and assist us discover sources of reality, after which, after all, rewards them and incentivizes them for doing that.”

Decentralized prediction markets declare to be extra environment friendly than their centralized counterparts as a result of they lack intermediaries, and because of this have fewer charges. Their decentralized nature additionally permits for a better diploma of privateness than in conventional prediction markets, and lots of prediction markets use cryptocurrency as a method of fee, making them extra accessible to gamers all over the world.

That additionally signifies that decentralized prediction markets have thrown up challenges for regulators, since legal guidelines round playing, securities and contracts differ between jurisdictions.

Crypto prediction markets have confronted regulatory scrutiny, with a U.S. Commodity Futures Buying and selling Fee (CFTC) spokesperson noting that, “providing or facilitating a product or exercise by means of releasing code onto a blockchain doesn’t absolve any entity or particular person from complying with pertinent legal guidelines or CFTC laws,” in response to a query about Augur. In 2022, Polymarket was hit with a $1.4 million nice by the CFTC, which accused the prediction market of letting individuals make bets with out being registered.

This text was written in December 2024 and up to date in July 2025.