Exploring the prediction market asset technology featured in the Bitshares spotlight! Decentralized bets, what's not to like?
Decentralized predictions - possible on the Bitshares blockchain!
Were you aware that the Bitshares blockchain has supported the creation of decentralized predictions in the form of prediction market assets since 2019?
These enable anyone to create a bet on the Bitshares DEX, for example the price of BTS will be worth more than $0.01 today, allowing all Bitshares blockchain participants to bet on this outcome in a decentralized manner.
The topics of predictions is fully open, there's no limited type of bet, political/financial/cultural/etc they're all on the table.
At the time of evaluation, the creator of the prediction market will apply the outcome, and either the prediction market asset will have value if true, or it'll be reduced to 0 if false, enabling two sides to bet on an outcome in a decentralized manner.
The prediction market creation screen is featured on the Bitshares spotlight page, where all new features go, check it out!
The technical explanation of prediction market technology
A prediction market asset allows you to agree or disagree with the prediction (condition) of the asset and put collateral behind your opinion.
A prediction market is resolved by its issuer after the resolution date to reflect the real world outcome of the prediction on-chain.
On the blockchain, a prediction market asset is special kind of SmartCoin that anyone can borrow. The total debt and total collateral are always equal amounts (borrowing 1:1), margin calls or force settlements are deactivated.
A prediction market asset has the active market of itself with its collateral.
Agreeing with the prediction means to buy the prediction market asset, whereas disagreeing with the prediction means to borrow it and sell it.
Resolving a prediction market asset is done by forcing global settlement, with a global settlement price given by the issuer.
After resolution (global settlement), and if the prediction proves true (global settlement price is 1), holders of the prediction market asset can instantly force settle it to obtain the same amount of the underlying collateral.
If the prediction is incorrect (global settlement price 0), owners of margin positions will automatically get back all the collateral that was locked up in the position.
For further info, check out the prediction market documentation.
How do you create one?
Navigate to the prediction market page within the Bitshares reference wallet, you'll see the following page:
To see past prediction markets, untick the Hide unknown houses toggle, to see user created predictions. Other users will also need to untoggle this to see your prediction market in this page, unless they locate your prediction market asset via the prediction market section of the built-in asset explorer.
To continue creating your new prediction market, click on the Create prediction market button, launching the creation modal:
So for example we could enter the following data:
Symbol: Mycustomprediction
Condition: The value of BTS is worth more than $1.00
Description: The value of BTS, as fetched from the coinmarketcap overview page, if worth more than $1.00 by the expiry date, will win this prediction.
Resolution date: 25/12/2022
Backing asset: BTS
Commission: 1%
We would then click submit, creating the prediction market asset in return for asset creation fees; to reduce the cost of creating prediction market assets on the Bitshares blockchain you should purchase a life-time membership on the Bitshares blockchain.
It'd then be in my best interest to promote my newly created prediction market to the Bitshares community, earning me 1% commission on all bets.
By the resolution date, it'd be my responsibility to correctly resolve the outcome, delivering the bet winnings to the rightful side of the prediction.
What are your thoughts on prediction markets?
Have you used them before?
If you had to create a new Bitshares prediction market asset, what would you create? What kind of prediction/bet interests you the most?
Comment below!