Betting on the primaries? No takers on crypto prediction markets

By February 28, 2020 Ethereum
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Democrats in 15 states are voting in the next four days. Decentralized prediction markets have crickets.

Image: Shutterstock
  • Super Tuesday is on March 3.
  • There's only one active market on Augur to bet on the Democratic primaries, and little on other decentralized platforms.
  • Augur is transitioning to its version 2, which will improve UI/UX and add currencies.

About a third of Democratic voters will soon be going to the polls to select a presidential nominee, and most place electability as their top priority. Unfortunately, they won't be able to get much guidance from decentralized prediction markets.

In fact, the best-known blockchain-based prediction platform, Augur, features no markets for betting on Saturday's South Carolina primary and only one for Super Tuesday. A little over 10 ETH has been wagered on the question "How many Super Tuesday Democratic primaries will Bernie Sanders win?" Pickings are slim elsewhere, too. Gnosis’ Sight platform, currently in beta, has three open markets, all related to ETH 2.0 timelines. Helena Network has zero betting markets.

It's not just politics. Coronavirus, sports, GDP growth: predictors are all practically silent about world and local events. According to DappRadar, only three users—about a half dozen fewer than the total number of Democratic candidates—used the application on February 26, good enough for total transaction volumes of 20 ETH.

It wasn't supposed to be like this.

Augur, open-source software that allows users to create prediction markets via Ethereum smart contracts, was created to remove the limitations of centralized prediction markets. The Augur white paper argued that centralized markets "do not allow global participation, they limit what types of markets can be created or traded, and they require traders to trust the market operator to not steal funds and to resolve markets correctly."

For instance, one popular centralized prediction market that isn’t built on a blockchain, PredictIt, creates its own markets and serves as the arbiter in case of disputes. It's essentially like a casino.

By contrast, Augur allows users to create their own bets—say, how many cryptokitties will be minted in 2021, and pays out via smart contract to those who predict correctly.

The prediction possibilities, therefore, should be endless. Instead, centralized sites like PredictIt brim with options—there are 118 possibilities currently trading for the Democratic nomination alone, including one for each individual Super Tuesday state—while the slate offered by Augur users is minimal.

There are, of course, explanations for the lack of activity.

First, Augur is in the midst of transitioning away from its beta to version 2 of the platform. Because of this, it instituted a market cutoff date and higher staking requirements for reporters, which may have altered the availability of markets. The new version, which is currently projected to go live in Q1 promises no betting limits, better odds and lower fees, and DAI/USD betting.

Perhaps most importantly, the layout will improve. Currently, for instance, probabilities for the question of "Who will be the 2020 Republican nominee for president?" use percentages: 95% for Donald Trump, 9% for Mike Pence, 10% for John Kasich, and so on—adding up to a perplexing 155.10%. Screenshots of version 2 show a much-improved UI/UX that will be less likely to scare off Decrypt reporters or seasoned bettors.

While Augur may hope that UI/UX changes and DAI betting help bring users aboard, it's worth noting that the dapp has never fully taken off. Its high-water mark of 260 daily users came on July 11, 2018, the day after it launched. Since that month, it's seen more than 100 daily users just twice.

Then again, given the nascency of the Ethereum network, its low usage reflects the nominal use of decentralized applications as a whole. For example, 0xUniverse, an Ethereum gaming dapp, sneaked into the top five with 2,200 users during the past week.

As for whether Augur or similar decentralized prediction platforms will be more vibrant in time for the 2024 primaries, after they've had time to mature, all bets are off.

Image: Shutterstock Super Tuesday is on March 3.

There’s only one active market […]

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