"Prediction, not narration, is the real test of our understanding of the world." -Nassim Taleb Grab your coffee and Clorox. It's time to talk Augur and prediction markets. 🔥



The Prediction Market Landscape

While researching Omen, a prediction market built around Gnosis, I came across this great presentation by Friederike Ernst. She gives a birds-eye view of the landscape, surveying FTX, Augur, Omen and other prediction markets, looking at their similarities and differences.



Why Decentralized?



Vitalik tweeted something today that I thought was super on point:







I believe that in the long run, the most successful prediction market platform will be the one that the most talented devs and entrepreneurs are building on..and they won't be building on a centralized one. One reason is that they won't be able to trust that such a platform will "always be there." For something like Augur that lives in a heavily regulated space, decentralization isn’t just a matter of success, it’s a matter of survival. Any prediction market that is not decentralized will either be regulated out of existence, or at least out of being (maximally) useful.



Unlike devs, end users of prediction markets could care less about decentralization, *BUT* all the killer features that they do care about are impossible or at least unsustainable on centralized platforms.



Centralized prediction markets are like paper airplanes while decentralized ones are like rocket ships. The advantage of a paper airplane is that it's easier to build and it will get off the ground much faster...but it won't get you very far.



Prediction Markets > The News



Paul Graham voiced something in Coronavirus and Credibility that I'm guessing has crossed many of our minds lately: how unreliable and inaccurate much of mainstream media has been around this pandemic, especially early on.



Why is this?



Part of it, as Paul gets at, is that they lack the right incentives. News organizations are incentivized to get clicks and eyeballs, not necessarily to tell the truth or make accurate predictions. As Naval Ravikant put it, “The Internet commoditized the distribution of facts. The ‘news’ media responded by pivoting wholesale into opinions and entertainment.” Put simple, news media has morphed into an entertainment business, rather than a facts business.



The broader issue is that talk is cheap. Whether on T.V., or Twitter, anyone can spew out any predictions and pay little or no cost for being wrong. In fact, sometimes being the loudest and most overly simplistic pays greater rewards (clicks, viewers, likes etc) than being thoughtful, nuanced, and accurate.



I've written about how Augur has the potential to not just create more accurate forecasts but maybe even to improve public discourse by facilitating predictions with skin in the game that are accountable, falsifiable, and probabilistic. Wouldn't it be great if whenever someone made a prediction on Twitter, they put their money where their mouth was and linked it to an Augur trade? You can delete a Tweet, but you can't delete a timestamped transaction on a blockchain.













I recently had an interesting conversation with Chris Gillett, who created Town Hall Index (THI), a purely data-driven news source. THI paints a picture of what's happening in the world by compiling quantifiable things like prediction market prices, polling numbers, and the number of media mentions for different presidential candidates. When I look at THI, I feel like I'm peeking into the future of news, or at least what I'd like it look like.



I see THI as a kindred spirit to prediction markets. In fact, it sources a lot of data from PredictIt, Augur's centralized analog. Chris and I see much potential for symbiosis between THI and Augur down the road. For example, Augur can identify so-called "superforecasters", folks who are good at predicting things, and THI may curate these voices and give them a venue to broadcast their predictions and explain the thinking behind them.





A Snapshot of Town Hall Index



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The Artist & The Fighter: Federer vs. Nadal Okay totally off-topic, but the other day, I stumbled across this wonderful documentary on YouTube that chronicles what may be the best match ever played in the history of tennis: The Wimbledon 2008 Final, Federer vs. Nadal. I don't think you have to be into tennis to enjoy this one, as it goes deeper into the soul of sport and competition. My favorite quote: "Federer is an artist who knows how to fight. Nadal is a fighter who knows how to be an artist."

Alright ladies, gents, cats, and bots...signing off for now. As always, feel free to say hi with any thoughts or questions. Hope you have a good rest of the week and stay safe out there! Happy predicting & social d i s t a n c I n g,

Ben



p.s. I'm guessing I'm not the only one who can relate to this...



