Prediction Market text

--- tags: Prediction Market, tezos title: Prediction Market text --- # Prediction Market text ### Clear name for auction concept, e.g. initial auction offer, investment phase This software implements a crowd-funded prediction market. Once the market has been initiated by setting the question and other details, other participants can give their own assessments of the likelihood of the question coming true, and investing in the market. Not only will these initial participants have a stake in the market, they will also profit from its operation, taking a share of the market's fees. From then on the market operates in a standard way--each token will pay out to one or zero coins, depending upon which way events transpire. A 5% fee on winnings rewards participants in the investment phase, and those who have contributed liquidity to the market during its operation. ### General about + legal at the bottom of every page (see OpenSea as good example) ### Long-form explainer about all the details Market creation starts with a question, and a date by which it can be answered. The questions can come from any subject area--politics, sport, finance. The only condition is that the question must be answerable with 'yes' or 'no'. Examples of this are - will Joe Biden still be president of the United States on the 1st of January 2024? - will 2021 be hotter on average than 2020? - etc A market creator creates this initial question, along with the way that it will be answered. There are two ways for questions to be resolved--either by an on-chain Oracle, or by a human being. Of course the first method is better, at least as long as the oracle is trustworthy. But not all questions can be answered in this way at present, and sometimes we must trust human beings. Whether or not these methods are trustworthy is an important question that those considering participating in a prediction market must answer for themselves. The creator of a market must invest some currency in the market, and give their own estimate of the likeliness of a 'yes' result. After the market has been set up it enters an auction phase in which other participants can give their own estimate of the probablity of the market resolving to yes, and must invest in the market themselves. At the end of the auction a consensus probability is calculated, and yes and no tokens are issued to participants, according to their preference. The leftover tokens are placed in a liquidity pool. Now trading can start in earnest. Since Yes and No tokens are created in pairs, we can use the creation of tokens (minting) and exchanging them with the liquidity pool (uniswap) to sell tokens to anyone. We can also allow people to invest in the uniswap itself. At the end of the auction each token becomes worth 0 or 1 coins, depending on the answer to the question posed at the beginning. A 5% fee is charged on winnings, which is distributed to the auction initiator, the auction participants, and the liquidity providers. ### Create Market -- Brief explainer about how to create a market + process You must provide a simple, unambiguous question which will describe the auction. This should be answerable with yes or no. Examples include, - Will Joe Biden be president on Jan 1st 2024? - Will 2021 be hotter than 2022? You will need to specify the method by which the question will be answered, and the date on which it was answered. The information can come from one of our supported oracles, or be answered by the market creator. Bear in mind that people will be more inclined to trust an oracle than someone who has an interest in the market themselves. For oracles, you must enter the value returned by the oracle which will represent a yes answer. ### Create Market--Explanation of headline question (e.g. human readable, where it will appear, requirements) The question is what people will first see of your market. Make it clear, understandable, and unambiguous. ### Explanation of oracle, how query works, any guidance on structuring Oracles are on-chain sources of truth. The oracle is asked a question, and returns an answer. The precise format of the question is a matter for the oracle you are asking, as is the format of the answer it will return. ### Explanation of how yes response works, any guidance on structuring The oracle will return a value. You must specify what answer identifies a yes response. ### Purpose of ticker name, requirements (1-4 characters, numbers & letters, unique) The ticker name is a sequence of up to four letters and numbers which will be a shorthand for your market. It must be unique to this prediction market instance. ### Explanation of purpose + process of auction phase It is important for a prediction market to have a supply of liqudity (yes and no tokens) to permit people to buy tokens in the marketplace. The auction phase of the market serves this purpose--people give their assessment of the likelihood of a yes answer to the question, and commit coins. In return they receive tokens, and a share of the final proceeds from the market. ### Confirmation of market creation + payment ### 1-2 paragraph description of how auction + market work (will link to more long-form how it works page) ### 1-2 paragraph description of how auction + market work (will link to more long-form how it works page)