Prediction Markets Reimagined: From Challenges to Solutions with Seer Protocol

6 months ago 28

The problem with Traditional Decision Making Systems.

For centuries, organizations, governments, and individuals have relied on experts, committees, or board members and possibly gut feelings to make critical decisions.

While these are recognized as traditional systems, they are not without flaws, such as:

Lack of trust and bias
Lack of transparency
Lack of Scalability

Prediction markets were introduced to aggregate collective intelligence and predict outcomes.

However, it is not safe to assume that earlier prediction markets are not without their shortcomings. Some of them are as follows:

Centralized platforms have trust issues of their own as they rely on single-point data providers, which makes them prone to manipulation and inaccuracies.
Most platforms may be limited to binary outcomes, such as “Yes” or “No,” and lack more advanced tools for more complex markets that may require numerical or conditional scenarios.
Disputes on outcomes required a resolution from a centralized party.

The impact of these was clear, but they don’t quite come close to the full potential of prediction markets and how they can serve as powerful tools.

Futarchy Governance Systems and Prediction Markets on Seer Protocol

By definition, Futarchy, coined by Robin Hanson, is an alternative form of governance model in which prediction markets guide decisions.

DAOs such as MetaDao have adopted Futarchy to inform their decision-making process. Every policy faces the question, “Will policy X increase the token price?”

https://futarchy.metadao.fi/ — MetaDAO’s futarchy platform.

While Futarchy enables Governance with the Seer protocol, they also have an array of prediction markets covering everything from sports to political outcomes. So, while punters can back their sporting knowledge, organizations and DAOs can leverage the protocol to inform their decision-making process.

When Governance is led by markets and not votes, decisions are made that forecast the best measurable outcomes. Instead of emotions or bias, decisions are tied to metrics such as token price, profits, or community engagement. This is particularly useful for DAOs and organizations to test and execute decisions that are most likely to deliver the desired or most favorable results. One example of this could be a DAO creating a market for a new feature it would like to launch. Members could be encouraged to choose the outcome they believe will benefit the DAO, such as increased members or community engagement, or one they believe will positively impact the token price. The decision would then be made based on the market’s prediction of the most successful option.

Seer Protocol brings these ideas to life by combining Prediction Markets infrastructure and a Governance Framework.

DAOs may also use conditional predictions to forecast things such as “If X happens, how will Y perform?” This allows the evaluation of the potential consequences of actions before implementation.

Seer also boasts a reliable Oracle in Reality.eth. This ensures prediction markets are resolved fairly and accurately based on real-world outcomes.

Seer’s markets include categorical, scalar, and conditional, enabling custom systems to be tailored to unique governance needs.

Seer adopts ERC20 outcome tokens (xDAI, DAI, sDAI). These can be swapped on multiple platforms and exchanges, bringing these markets into the broader DeFi ecosystems and allowing for increased liquidity and participation.

Lastly, Kleros Court, used by some of the most notable protocols and organizations, can resolve any disputes arising from any of the futarchy markets transparently and trustlessly, which ensures credibility and confidence in the system.

Seer provides DAOs and Organizations with the tools to transition from voting-based Governance to data-driven and outcome-based decision-making.

Futarchy represents the future of Governance, and the Seer protocol offers a bridge to that future. Whether you’re a DAO looking to optimize your decision-making or an organization aiming for measurable success, Seer equips you with the tools to achieve optimal market-driven Governance.

Learn more about Futarchy and Seer Protocol.