Ethereum Prediction Market Service Takes First Steps With Beta Launch

A new prediction market is set to go live on the ethereum network this week.

AccessTimeIconAug 17, 2016 at 6:50 p.m. UTC
Updated Sep 11, 2021 at 12:27 p.m. UTC
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A new prediction market platform is set to go live on the ethereum network this week.

Called Gnosis, the project will allow users to wager on future events by asking and answering questions about the outcome of sports games or elections. However, the platform's creators envision Gnosis one day serving as a platform for a wide range of user-created prediction markets.

An example touted by the team is a sample platform called Hunchgame, which would see Gnosis being used as a basis for a prediction market centered on celebrity gossip.

One of the more experimental use cases for public blockchains, decentralized prediction markets combine new technology with an old concept, one that in the past has seen centralized versions shuttered by governments or unable to hit critical mass due to regulatory restrictions.

The idea is that by using a decentralized network and uncensorable money, the experimental efforts can continue without outside interference. Prediction market advocates also see the platforms as an opportunity to surface information that otherwise might not be made public for use by academics and decision-makers.

With the launch, Gnosis will join Augur as the latest effort to create a decentralized prediction market. As Augur has already launched in beta and held a crowdsale, some observers view the two companies as rivals.

But, there are aspirational and technical differences between the two platforms. For example, questions are resolved by oracles on Gnosis and Augur in different ways.

While Augur uses many oracles to determine the outcome of an event, Gnosis uses a mechanism whereby only one or a few oracles provide the outcome, a feature they say will lead to faster validation.

If any one oracle disagrees with the conclusion, the decision falls to a pool of oracles to decide as a "last resort".

Gnosis founder Martin Köppelmann further says that Gnosis boasts features Augur doesn’t have, such as a long-term plan for incorporating futarchy, an experimental form of government that uses prediction markets.

Launch details

Gnosis began working on ethereum earlier this year, but would pull back the project to an internal test network to experiment with a new system.

This time, they are launching with a revised version, one where content isn’t so tightly controlled by administrators.

If the "market" is built around the question, “Will Hillary Clinton win the 2016 presidential election?", for example, oracles settle on the final answer and provide validation of the outcome.

Gnosis decentralized autonomous strategist Matt Liston told CoinDesk:

"Anyone can sign up to use the oracle marketplace. That's a very, very big thing. And now anyone can now make markets. Before, these were admin features."

For the launch, Köppelmann said that his team has prepared questions to test on the network, including those centered on topics in recent bitcoin news.

Proposed questions focus on what will happen to Bitfinex, the bitcoin exchange that was hacked earlier this month, and when much-anticipated bitcoin features such as Segregated Witness will be released.

But users can submit any question that they are curious to see answered by a pool of betters.

As for whether Gnosis can grow to become the first widely used example of a decentralized prediction market, this remains to be seen.

While promising, the concept has its detractors. Prediction markets pioneer Robin Hanson, for instance, has said that the reasons that these betting markets haven’t been adopted on a wide scale are perhaps more complicated than industry innovators believe.

While possibly useful, he remains uncertain as to whether they will necessarily address the lack of widespread adoption of prediction markets that has been historically observed.

Image via Michael del Castillo for CoinDesk


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