Everipedia team announced that they will launch an EOS-based prediction market protocol PredIQt. It’s a layer that will be a part of a larger ecosystem of IQ Network of dApps which will also include an Oracle service.
Prediction markets are nothing other than futures markets. They can also compare to betting markets, although there needs to be a line drawn between prediction and gambling.
Predicting something means placing a bet on the probability of a specific outcome. This can be anything from the weather to a stock price, an election result, a sporting event, or company forecasting. The value of this bet will depend on the probability of a specific event happening. The event becomes more predictable as time passes by and with more people participating. The accuracy of a prediction depends on the wisdom of the crowd, which relies on the collective view of many people and not just on one person’s research. The token incentive given to the winner and the slashing condition of the bad outcome is sufficient for people to research the prediction likely to be the most probable. The incentive is an efficient way to make people perform more research on a particular market augmenting the probability of the right outcome.
PredIQt and EOS
Everipedia is built on the EOS blockchain and PredIQt will be an extension of the work that has been done so far. IQ token not only will be available on Everipedia itself but also on PredIQt and the whole IQ Network of dApps.
Building a prediction market on a blockchain like EOS makes much more sense as it’s a trustless platform that provides the decentralization needed to eliminate the middlemen who administer trades and bets. The risk of withholding the information or changing the outcome as well as the high fees involved with having middlemen are eliminated by the use of the EOSIO smart contracts.
In a decentralized prediction market anyone can participate and create a market.
For a prediction market to be effective it needs to rely on a resolver that is objective. A distributed system like the one PredIQt wants to adopt is a great advantage, but it comes with difficulties that a centralized prediction market doesn’t face.
Blockchain-based prediction market relies only on data available on the chain. This is why it needs to use a different kind of oracle working as resolvers which integrate data from the outside.
An oracle provides information about the truth happening in the real world. But the truth in the real world is not easily discoverable and this is the main challenge an oracle must face. An oracle is thus what matters most in a really trustless prediction market because it becomes the real source of the truth about the state of reality.
Its main task is to produce honest predictions about the future as well as honest reports of what has already occurred and the present state of the world.
PredIQt protocol won’t come with a single resolution system like has been done in Augur but will provide a platform where globally anyone can create a resolution system. This way each market maker will be able to easily plug into their own market on PredIQt. PredIQt wants to provide users with a large choice of oracles that will range from a single individual, a multi-sig, a DAC, a smart contract, a LiquidApps DSP, or a secure data feed like Oraclize.
The choice of a specific resolver will depend mainly on the market type and the users will make their choice regarding their confidence in the resolution system.
The Everipedia team will build the first app on top of the PredIQt protocol. They will release a minimum viable product (MVP) that will contain all of the core features needed for users to create EOS-based prediction markets.
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