How exactly should we understand market prediction? Some say it's just a casino, while others say it's a great innovation in information trading. So what exactly is market prediction? The word "casino" carries far too many negative and unpleasant connotations. Calculating probabilities, guessing price movements, and placing bets—while market prediction may resemble a casino in its operation and experience— However, simply viewing the prediction market as a casino is more like lazy thinking and a disdain for new things. After systematic research, I believe that the prediction market is not just a casino, nor is it just a casino of change, but rather an "information trading market" that can truly influence the world and aggregate market information. We can systematically study the prediction market from the perspective of casinos. 1. What are the core differences between prediction markets and casinos? The core difference between prediction markets and casinos lies in the fundamental difference in pricing power and risk-bearing entities. The casino operates on the principle of: a central house setting the price + unlimited betting. Prediction markets are: collective pricing by users + mutual betting. Here's a comparison using a table: Two examples can help to more intuitively understand the difference between the two: Casino example: Betting on "Brazil to win the World Cup" You bet 100 yuan, the odds are 1.95. The dealer sets the price; you can only accept it. Brazil wins → You get 195, the bookmaker loses 95 Brazil loses → Bookmaker takes 100 The house is your only opponent; he bears all the risks. The house edge (5%) is a long-term profit-maker. Example of a prediction market: Betting on "Trump to win the 2028 US election" Currently, Yes = $0.60 (market price) You buy 100 Yes → Pay 60 USDC Someone sold it to you. Yes → He believes Trump won't win. You and the "Yes seller" are gambling against each other. The platform (Polymarket) does not participate in betting and only charges a 1% transaction fee. Prices are driven by all buyers and sellers, like stocks. Simply put, a casino is like playing cards with the dealer, while a market prediction is like playing cards with your friends. 2. What are the advantages of market prediction over casinos? From gambling with the banker in casinos to gambling with each other in prediction markets, this has brought about many changes. Prediction markets have four very significant structural advantages over traditional casinos: 1️⃣ No need for complex risk control modeling Under the mechanism of predictive markets, even very niche long-tailed markets can be successfully launched. Even niche events like "whether it will rain in a specific city tomorrow" can be traded. This is because users often possess an informational advantage, automatically generating reasonable prices through market supply and demand. Traditional casinos, lacking sufficient data to support their betting operations, dare not open such betting platforms rashly. Traditional casinos must rely on manual methods to carefully set odds and also implement strict limits. 2️⃣ The platform operator assumes zero risk. Prediction market platforms do not act as counterparties, therefore they will never experience defaults. The platform can make a profit by charging only a low transaction fee (usually between 0.5% and 2%). However, in the traditional casino model, if the house loses all its money, the entire platform faces a crisis of collapse. This is because the house must bear all the enormous risks associated with unlimited betting alone. 3️⃣ Liquidity is sourced through a crowdsourcing model. In prediction markets, all participating users on the platform are essentially liquidity providers. For traditional casinos, all liquidity must be borne independently by the house. In this situation, small-cap stocks must be subject to strict limits to prevent large funds from dumping their shares. 4️⃣ Supports flexible exit at any time In prediction markets, users can sell their positions at any time, just like trading stocks, which greatly improves the efficiency of capital utilization. Furthermore, the forecasting market can also support leveraged trading, risk hedging, and various complex portfolio investment strategies. In traditional casinos, once a bet is placed, the funds are completely locked up, and participants cannot withdraw midway; they can only hold on until the final settlement. In summary, the transformation of the prediction market involves dispersing major players into the market, with advantages including zero risk control, zero risk, high efficiency, and broad coverage. But everything has two sides. What does predicting the market sacrifice? The main factors are the controllability of the market and the capacity to absorb large amounts of capital. 3. What are the shortcomings of market prediction? Prediction markets have a fatal flaw in their mechanism design: they cannot form market makers. Let's first look at what a market maker is: continuously posting two-sided quotes (buy/sell price) to earn the spread plus fees. For example, in an exchange, if you place a buy order for 99 yuan and a sell order for 101 yuan, and someone buys your sell order, you earn a 2 yuan difference. This is a long-term positive EV (Expected Value). In the prediction market, why is market making so difficult? There are three main mechanism issues: 1️⃣ No closing mechanism In prediction markets, trading can take place at any time before the outcome of an event, even at the last second. This leads to insider players placing bets in the last minute, consuming all the liquidity. 2️⃣ No slippage/limit In prediction markets, large orders can be executed at the current market price. This can cause the market maker's orders to be dumped instantly, leading to buyers buying at higher prices. 3️⃣ Zero exit cost Insider players have the option to attack or defend, while market makers can only passively take over the losses. Let's take a look back at the bookmakers in traditional casinos: You can close the market (stop trading 30 minutes before the event ends), set limits (you can place a maximum order of 1000 USDT), allow slippage (large orders are automatically subject to price increases), and refuse to accept orders. Therefore, the dealer can achieve a positive EV, with an advantage of 2%-5%. In prediction markets, market makers lack protection mechanisms and are vulnerable to targeted attacks from insiders, inevitably leading to long-term losses (negative EV). Negative EV is a game that is mathematically destined to lose money. Smart people either don't become the market maker, or they become a controllable market maker who can lock in the market, limit the amount, and control slippage. On a platform like Polymarket, which offers unlimited, zero-cost exits and market-based pricing, any market maker that unconditionally provides liquidity will inevitably lose money. The end result is that the liquidity of the long-tailed trading session is very poor, and large funds cannot enter. 4. What solutions can address the fatal flaws of market prediction? The only solution that can systematically address the three fatal flaws of prediction markets is a proprietary automated market maker protocol for prediction markets. The full English name is: Permissionless Proprietary Automated Market Maker for Prediction Markets. This is a DeFi protocol that allows anyone to create prediction markets, control slippage for market makers, provide liquidity from external professional LPs, and earn positive EV yields. Simply put, it's a hybrid of Polymarket, Hyperliquid, and Uniswap, designed specifically for casinos with large sums of money. There are three core elements: 1️⃣ Pool construction without a permit Anyone can create a market and solve the problem of long-tailed cold starts. The experience is comparable to Uniswap, allowing any wallet address to create any trading pair. 2️⃣ Controllable Liquidity Pool The trader sets slippage curves/closing time to prevent malicious large orders or insider attacks at the end of the trading day. For example, it supports dynamic slippage curves (the larger the trading volume, the higher the slippage), automatic pool locking N minutes before an event, and maximum single bet amount. 3️⃣ Professional LP External market makers deposit funds to earn fees, achieving positive EV. Only those with a positive EV rating and professional market makers can enter. In fact, Hyperliquid is already the highest level of implementation of PropAMM, suitable for high-frequency market making, and its dynamic rates are more controllable and professional. 5. In summary This article, from the perspective of casinos, systematically elaborates on the differences, advantages, and disadvantages between prediction markets and traditional casinos, and proposes relevant solutions. Hopefully, this article will give you a deeper understanding of the prediction market and a clearer view of its future development. Market prediction can be divided into three stages: 1️⃣ Traditional casino model: money laundering in the black and gray market, mainly involving users betting against the house, the problem lies in high risk control costs and the risk of platform collapse. 2️⃣ First-generation prediction markets: The typical example is the Polymarket, where players bet against each other. The drawbacks are that market makers have negative EV, long-tailed dead markets, and large funds cannot enter. 3️⃣ Second-generation prediction market: PropAMM-like protocol, licenseless + controllable slippage + professional LP, systematically solving the three major shortcomings of the existing market. Whoever can launch the complete Polymarket + Hyperliquid + Uniswap solution first might be able to capture this multi-billion dollar market!How exactly should we understand market prediction? Some say it's just a casino, while others say it's a great innovation in information trading. So what exactly is market prediction? The word "casino" carries far too many negative and unpleasant connotations. Calculating probabilities, guessing price movements, and placing bets—while market prediction may resemble a casino in its operation and experience— However, simply viewing the prediction market as a casino is more like lazy thinking and a disdain for new things. After systematic research, I believe that the prediction market is not just a casino, nor is it just a casino of change, but rather an "information trading market" that can truly influence the world and aggregate market information. We can systematically study the prediction market from the perspective of casinos. 1. What are the core differences between prediction markets and casinos? The core difference between prediction markets and casinos lies in the fundamental difference in pricing power and risk-bearing entities. The casino operates on the principle of: a central house setting the price + unlimited betting. Prediction markets are: collective pricing by users + mutual betting. Here's a comparison using a table: Two examples can help to more intuitively understand the difference between the two: Casino example: Betting on "Brazil to win the World Cup" You bet 100 yuan, the odds are 1.95. The dealer sets the price; you can only accept it. Brazil wins → You get 195, the bookmaker loses 95 Brazil loses → Bookmaker takes 100 The house is your only opponent; he bears all the risks. The house edge (5%) is a long-term profit-maker. Example of a prediction market: Betting on "Trump to win the 2028 US election" Currently, Yes = $0.60 (market price) You buy 100 Yes → Pay 60 USDC Someone sold it to you. Yes → He believes Trump won't win. You and the "Yes seller" are gambling against each other. The platform (Polymarket) does not participate in betting and only charges a 1% transaction fee. Prices are driven by all buyers and sellers, like stocks. Simply put, a casino is like playing cards with the dealer, while a market prediction is like playing cards with your friends. 2. What are the advantages of market prediction over casinos? From gambling with the banker in casinos to gambling with each other in prediction markets, this has brought about many changes. Prediction markets have four very significant structural advantages over traditional casinos: 1️⃣ No need for complex risk control modeling Under the mechanism of predictive markets, even very niche long-tailed markets can be successfully launched. Even niche events like "whether it will rain in a specific city tomorrow" can be traded. This is because users often possess an informational advantage, automatically generating reasonable prices through market supply and demand. Traditional casinos, lacking sufficient data to support their betting operations, dare not open such betting platforms rashly. Traditional casinos must rely on manual methods to carefully set odds and also implement strict limits. 2️⃣ The platform operator assumes zero risk. Prediction market platforms do not act as counterparties, therefore they will never experience defaults. The platform can make a profit by charging only a low transaction fee (usually between 0.5% and 2%). However, in the traditional casino model, if the house loses all its money, the entire platform faces a crisis of collapse. This is because the house must bear all the enormous risks associated with unlimited betting alone. 3️⃣ Liquidity is sourced through a crowdsourcing model. In prediction markets, all participating users on the platform are essentially liquidity providers. For traditional casinos, all liquidity must be borne independently by the house. In this situation, small-cap stocks must be subject to strict limits to prevent large funds from dumping their shares. 4️⃣ Supports flexible exit at any time In prediction markets, users can sell their positions at any time, just like trading stocks, which greatly improves the efficiency of capital utilization. Furthermore, the forecasting market can also support leveraged trading, risk hedging, and various complex portfolio investment strategies. In traditional casinos, once a bet is placed, the funds are completely locked up, and participants cannot withdraw midway; they can only hold on until the final settlement. In summary, the transformation of the prediction market involves dispersing major players into the market, with advantages including zero risk control, zero risk, high efficiency, and broad coverage. But everything has two sides. What does predicting the market sacrifice? The main factors are the controllability of the market and the capacity to absorb large amounts of capital. 3. What are the shortcomings of market prediction? Prediction markets have a fatal flaw in their mechanism design: they cannot form market makers. Let's first look at what a market maker is: continuously posting two-sided quotes (buy/sell price) to earn the spread plus fees. For example, in an exchange, if you place a buy order for 99 yuan and a sell order for 101 yuan, and someone buys your sell order, you earn a 2 yuan difference. This is a long-term positive EV (Expected Value). In the prediction market, why is market making so difficult? There are three main mechanism issues: 1️⃣ No closing mechanism In prediction markets, trading can take place at any time before the outcome of an event, even at the last second. This leads to insider players placing bets in the last minute, consuming all the liquidity. 2️⃣ No slippage/limit In prediction markets, large orders can be executed at the current market price. This can cause the market maker's orders to be dumped instantly, leading to buyers buying at higher prices. 3️⃣ Zero exit cost Insider players have the option to attack or defend, while market makers can only passively take over the losses. Let's take a look back at the bookmakers in traditional casinos: You can close the market (stop trading 30 minutes before the event ends), set limits (you can place a maximum order of 1000 USDT), allow slippage (large orders are automatically subject to price increases), and refuse to accept orders. Therefore, the dealer can achieve a positive EV, with an advantage of 2%-5%. In prediction markets, market makers lack protection mechanisms and are vulnerable to targeted attacks from insiders, inevitably leading to long-term losses (negative EV). Negative EV is a game that is mathematically destined to lose money. Smart people either don't become the market maker, or they become a controllable market maker who can lock in the market, limit the amount, and control slippage. On a platform like Polymarket, which offers unlimited, zero-cost exits and market-based pricing, any market maker that unconditionally provides liquidity will inevitably lose money. The end result is that the liquidity of the long-tailed trading session is very poor, and large funds cannot enter. 4. What solutions can address the fatal flaws of market prediction? The only solution that can systematically address the three fatal flaws of prediction markets is a proprietary automated market maker protocol for prediction markets. The full English name is: Permissionless Proprietary Automated Market Maker for Prediction Markets. This is a DeFi protocol that allows anyone to create prediction markets, control slippage for market makers, provide liquidity from external professional LPs, and earn positive EV yields. Simply put, it's a hybrid of Polymarket, Hyperliquid, and Uniswap, designed specifically for casinos with large sums of money. There are three core elements: 1️⃣ Pool construction without a permit Anyone can create a market and solve the problem of long-tailed cold starts. The experience is comparable to Uniswap, allowing any wallet address to create any trading pair. 2️⃣ Controllable Liquidity Pool The trader sets slippage curves/closing time to prevent malicious large orders or insider attacks at the end of the trading day. For example, it supports dynamic slippage curves (the larger the trading volume, the higher the slippage), automatic pool locking N minutes before an event, and maximum single bet amount. 3️⃣ Professional LP External market makers deposit funds to earn fees, achieving positive EV. Only those with a positive EV rating and professional market makers can enter. In fact, Hyperliquid is already the highest level of implementation of PropAMM, suitable for high-frequency market making, and its dynamic rates are more controllable and professional. 5. In summary This article, from the perspective of casinos, systematically elaborates on the differences, advantages, and disadvantages between prediction markets and traditional casinos, and proposes relevant solutions. Hopefully, this article will give you a deeper understanding of the prediction market and a clearer view of its future development. Market prediction can be divided into three stages: 1️⃣ Traditional casino model: money laundering in the black and gray market, mainly involving users betting against the house, the problem lies in high risk control costs and the risk of platform collapse. 2️⃣ First-generation prediction markets: The typical example is the Polymarket, where players bet against each other. The drawbacks are that market makers have negative EV, long-tailed dead markets, and large funds cannot enter. 3️⃣ Second-generation prediction market: PropAMM-like protocol, licenseless + controllable slippage + professional LP, systematically solving the three major shortcomings of the existing market. Whoever can launch the complete Polymarket + Hyperliquid + Uniswap solution first might be able to capture this multi-billion dollar market!