Ethereum-based market predictions are the key to unlocking the future

Rage Review : Ethereum market prediction platform Augur has entered the testing phase, and Satoshi Fantasy's professional market prediction application is also based on blockchain. This new market prediction idea uses blockchain smart contracts to set up a reasonable incentive mechanism and ensure the safety and efficiency of the implementation process. The experience of Warren Buffett, a legendary figure in the investment world, tells us that good results come from the right choices. Recently, Gnosis, a market prediction service provider based on the Ethereum platform, has brought us a new elite management model, helping investors make the right investment decisions with its unique perspective.

Translation: Annie_Xu

Warren Buffett is often called the "Oracle of Omaha" because of his legendary ability to always choose the right investment projects. The right choice is important, and good results come from the right choice.

The market can also play the role of a prophet. If we can design a system that uses the collective wisdom of the market to formulate appropriate policies or effective management models.

Can we create a system that allows poor countries to make better development decisions, or predict future trends? What if we could create an entire market for predictions? Ethereum can provide a unique way to do this.

Market Forecast

Gnosis is a market prediction service provider based on the Ethereum platform, aiming to help people identify future trends. They hope to become a prophet, allowing users to create single investment projects or crowdfunding projects and obtain investment.

Gnosis strategist Matt Liston describes the company's operations as follows: "Gnosis uses financial incentives to help everyone, anywhere, predict the outcome of events. This is an indispensable tool for creating an efficient information economy. Gnosis applications span many fields, from flexible and efficient sports betting to financial tools, to new management, insurance, action incentives, information aggregation, and countless others. The Gnosis platform will help everyone quickly create new applications. Our goal is to make this program as easy as creating a Facebook page. Gnosis will become a toolkit for the next generation of markets and a shared liquidity pool."

Shaping market policies

Market forecasts can provide useful data to create a government management model called "Futarchy" (a government management model theory by economist Robin Hanson). It can help form new policies in many areas.

One example is Gnosis’s plan to reinvent the DAO (Decentralised Autonomous Organisation), hoping to create a platform-level DAO where anyone can veto the core team’s funding proposals.

This will trigger a Futarchy mechanism, and then two Gnosis tokens will be formed, just as Matt Liston said: "The A token and B token correspond to the situations where the proposal is passed and not passed respectively, representing the value of a Gnosis token. These tokens can be traded in the market. Participants who believe that the proposal is not in the interests of Gnosis can sell A tokens and keep B tokens. On the contrary, they need to sell B tokens and keep A tokens. In this way, the exchange rate of the two tokens represents the appeal of whether to pass the proposal. Then the decision is made based on the party with the higher token value."

Does the market rule everything?

Although the market is a factor that influences future trends to a certain extent, it is well known that social, political or sudden economic fluctuations will cause irregular changes in the market. This applies not only to regular economic markets, but also to market forecasts.

Reporters asked Matt Liston what he thought about situations where the market or voters couldn't predict and what problems there might be in the system.

He pointed out that the two major types of situations that the market cannot predict are situations that cannot be easily decided and situations that pose a threat to survival.

He gave examples such as "Will an asteroid destroy humanity?" and "Does God exist?" The reason why life-and-death matters are difficult to make decisions on is that they threaten the survival of the market, so there is no motivation to make predictions.

It is difficult to draw accurate conclusions in difficult decision-making situations. There is a lack of capacity and experts with unique knowledge in problem areas that may affect market forecasts.

However, Gnosis believes that these issues can be ignored because if the proposal is controversial enough, it will attract enough participation.

Necessity of testing

One of the problems with DAOs is the lack of good traditional experimental testing. Gnosis told us that they believe that DAO-funded projects have insufficient participation and consensus requirements.

This view has theoretical merit, considering that traditional funds require more binding agreements before investing in a project, and traditional funds usually employ experts.

Matt Liston

However, Gnosis is still looking forward to the future prospects of the DAO management model.

“Ethereum developers have provided us with a lot of financial support to test Futarchy’s cryptoeconomic hypotheses; in particular, the difficulty for participants to manipulate market value driven by incentive policies. We hope that it and the tools we are preparing can lay the foundation for the management of future DAOs.”

Potential risks of The DAO fork

Although Gnosis did not make a prediction about Ethereum’s hard fork, the reporter was able to get some of their thoughts.

Matt Liston said: "I hope the hard fork will not bring anything bad because it is demonstrative. However, I believe this is a more realistic decision. Some people may think that the hard fork violates the principle of immutability. However, the hard fork only modifies all the DAO transactions of the attacker, and the decision to hard fork is based on some form of social consensus within the system."

The market needs insightful players

The idea that markets can drive policy evolution is interesting in itself. Even elected governments let technocrats and civil servants guide policy because they are experts in their fields. In order for the market to make reasonable decisions, the participants must have sufficient knowledge. The so-called majority rule cannot solve complex policy problems.

What will be interesting about the future is whether this market prediction will become mainstream or the preserve of a few. Although we have to admit that the problems encountered by the market are the most important.

In highly specialized fields, the specificity of the problem may attract a certain type of investor, while the general public may participate in a general problem because it has universal appeal.

Gnosis has a firm stance on this.

As Matt Liston said: “Participants must be familiar with Gnosis’ work, and many of them may be enthusiasts of cryptocurrency or market predictions, and have a vested interest in the platform’s achievements.”