A new level of functionality brought to life by the the BitShares community is here with the release of the decentralized prediction markets! While these have technically been accessible for quite some time, many had previously been unaware.
These are now available from the spotlight section of the wallet, however details and an announcement have been forthcoming until now.
Patience and Cooperation
The community first began to discuss if BitShares Prediction Markets should be enabled all the way back in 2015.
While certainly an exciting element to add, the community first had to define the best context for these to fit in with the BitShares ethos. Members agreed that while framing the feature as outright gambling was a net negative, the potential for complex risk-to-reward mechanisms based on world events is a legitimate use case.
The community tempered its excitement by acknowledging the risks. Some voiced concern about negative impact and association that comes with the gaming industry as well as from regulatory bodies. Others noted the opportunities for growth if the presentation was refined.
Businesses that provide fiat gateways to BitShares could be placed at risk and jeopardize the health of the entire ecosystem. On the other hand, offering such markets with a much lower “vig” creates significant incentives for participants. The decentralized alternative widens the availability far beyond that of the traditional industry’s reach.
Screenshot from the new Prediction Markets dApp interface
While some noted that there are other projects working exclusively with prediction markets, progress and adoption have overall been elusive. However, there does exists the potential for existing BitShares businesses to strengthen ties and increase their interactivity. New outfits looking to build on the platform would have an additional and unique incentive to join as well.
Creativity will also play a strong role in dictating the direction their implementation takes. One community member's suggestion replicating the prediction markets on other platforms, resulting in the potential for prediction market arbitrage.
Development Progress
A number of community members have been hard at work addressing issues related to the BitShares Prediction Markets via their development activities.
One major concern was around the possibility of a black swan event forcing the outcome to go the wrong direction. Another is in having accounted for predictions which result negatively (binary value of zero) which would eliminate any market fees to be collected by BitShares. Developers restricted the status of assets after predictions are complete to prevent any subsequent manipulation or other unintended use.
Developers also determined that witnesses fulfill the role played by oracles in other prediction market projects outside of BitShares. This choice removes the possibility that the house (creator of a specific wager) could resolve the positions contrary to the real-world outcome.
As always, the developments have ensured all of the code has been optimized to prevent unusual, unexpected or sub-optimal outcomes.
Prediction Markets in a Nutshell
How does a prediction market work anyhow?
- First, the creator of a wager issues a UIA (the prediction tokens) on the BitShares blockchain. This also defines the event conditions and timeline for resolution.
- Then, those who believe the event will occur would place a buy order at the price which reflects how certain they are.
- Concurrently, other participants who believe the event will not occur place collateral for borrowing the tokens. They then sell them to create a short position (again at a price which reflects their confidence).
- The participants' wagers are resolved after the deadline is reached. The token creator will pay out the collateral to one side or the profits from short sale are retained by the other.
Creating a Prediction Market
First, select the prediction market in the Spotlight section of the menu and select the Prediction Markets.
Here you may view the existing Prediction Markets for a better understanding of their components and progress. User can filter by name, activity status, house and asset qualifiers and more.
To set the market into motion, click the "Create Prediction Market" button and the parameters can be defined. This process creates the UIA and all conditions of the wager. Potential creators should prepare themselves for the fee of 1,263 BTS.
Conclusion
In light of this new feature and the recently completed Global Graphene Blockchain Developer Conference, community confidence is sure to continue rising. BTS holders, developers and businesses alike see a new horizon emerging.
The BitShares Prediction Markets bring both opportunities and challenges. However, the community's coordinated activity are a testament to the collaborative and community spirit of BitShares.
Members have been discussing and developing continually as BitShares continues to improve. When the participants introduce more complimentary use cases, the network will only continue to become stronger.
Posted from BitShares News using SteemPress, see: https://news.bitshares.org/bitshares-prediction-markets/