UncategorizedPrediction456 lines
Prediction Markets Fundamentals
Quick Summary18 lines
Prediction markets are exchange-traded markets where participants buy and sell contracts whose payoffs are tied to the outcomes of future events. They function as decentralized forecasting engines, aggregating dispersed information into probability estimates through the price mechanism. ## Key Points - "Will candidate X win the 2028 presidential election?" - "Will GPT-5 be released before July 2026?" - "Will global average temperature exceed 1.5C above pre-industrial levels in 2027?" 1. Buyers submit bids (maximum price they will pay) 2. Sellers submit asks (minimum price they will accept) 3. When a bid meets or exceeds an ask, a trade executes 4. The last trade price becomes the current market price - Prices always sum to 1.0 across all outcomes - The liquidity parameter `b` controls price sensitivity (higher b = more liquidity, less price impact per trade) - Maximum subsidy (loss) the market maker can incur is `b * ln(n)` where n is the number of outcomes - Prices move smoothly and continuously - Blockchain-based (Polygon), uses USDC
skilldb get prediction-skills/prediction-markets-fundamentalsFull skill: 456 linesInstall this skill directly: skilldb add prediction-skills