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Turn your live predictions into liquid assets.
Prediction markets are capital intensive.
OpenPredict adds a secondary market to live predictions, making it possible to enter or exit before an event concludes.
OpenPredict Protocol
OpenPredict powers a new standard of predicting which recognizes live predictions as capital-backed assets. Predictors mint event-specific tokens, which fluctuate in market value, relative to changing market odds.
Step 1.
OpenPredict Protocol
Step 1. Initiation

Mint "o" and "io" token associated with event.
An "o" token is minted at the time of prediction launch for any event.

The "o" token is rewarded the prediction pot if the event turns out positively.
The "io" token is rewarded the prediction pot if the event turns out negatively.


Examples

Event A: The Packers win the 9/13 game.
Event B: Tesla stock has positive close on August 15. Event C: Bitcoin price exceeds $20,000 in 2020.

The "o" tokens win if the events turn out positive, i.e. for event A, Packers win the game.
The "io" tokens win if the events turn out negatively, i.e. for event A, Packers lose the game.


Initiation Process

For each event, three smart contracts are launched. One contract acts as the escrow for the funds, one for the minter of "o" tokens, and one as the minter of "io" tokens.

The escrow contract distributes rewards to either "o" or "io" tokens, depending on which side wins. Further, the odds are decided based on how many tokens are minted of each side.


Market Creation

A minimum of $50,000 has to be escrowed in total, in order for a smart contract on an event to launch. No prediction can exceed 10% of the outstanding pot. This means initial predictions cannot exceed $5,000, but if the pot grows, then the maximum prediction can also grow.

If the pot reaches $500,000, for example, then the maximum prediction can be raised to $50,000. Moreover, more than 90% of the market cannot make prediction on one side of the event.

Whenever an "o" or "io" token is minted, the odds are displayed in the UI. This ensures that the market is able to see when the odds are reasonable based on their prediction.


Example: Tesla stock price exceeds $3,000 in 2020.

  1. At event launch, $0 has been escrowed.
  2. User 1 believes the event will be positive ($TSLA exceeds $3,000 in 2020), and so he predicts $5,000 on "o" tokens. At this point, the event cannot launch.
  3. Users 2, 3, 4, 5, 6, 7, 8, and 9 are all bullish on Tesla and hence also predict $5,000 on "o" tokens. At this point, the event has $45,000 long on "o" tokens.
  4. As 90% of the event participants are predicting one side of the event, user 10 must mint an "io" token or else the event does not launch.
  5. If user 10 were to predict against Tesla price of $3,000 with a speculation of $45,000, thereby making total pool worth $90,000 and the predictions of "o" vs "io" 50/50 odds, more users can come and predict in favor of Tesla price being $3,000 in 2020.


Token Minting

Each full "o" or "io" token is denominated as $100 at event launch. These tokens are fractional so 0.01 token will be $1.

Each event contract, which acts as the escrow, has a participation limit date. The event must reach a pot of $50,000 or more to start.

Take an event predicting whether or not Tesla stock exceeds $3,000 in 2020.

It starts with a $30,000 prediction towards "o" tokens, which aim for a positive conclusion to the event, and $20,000 prediction towards "io" tokens, which aim for a negative conclusion to the event. This event has a $50,000 minimum pot and so can initiate.
  • At event launch, each "o" and "io" token is equal to $100.
  • 300 "o" tokens equal $30,000 and 200 "io" tokens equal $20,000.
  • If, a few weeks after the launch, people become bearish on Tesla stock price, the value of "o" tokens may halve.
  • If "o" tokens become worth $50 on the live market, due to bearish sentiment, then the 300 minted "o" tokens are now collectively worth $15,000.
  • Meanwhile, the "io" tokens should now be worth $175 each, as only 200 of them were minted as few people were bearish on Tesla at launch.
  • Collectively the 200 "io" tokens are worth $35,000 and the 300 "o" tokens are worth $15,000.

In a typical prediction market, the predictors have to wait till event conclusion to redeem their money. At that point, "o" tokens split all the money from "io" tokens if Tesla indeed crosses $3,000 in 2020.

Alternatively, "io" tokens split all the money from "o" tokens if Tesla fails to cross $3,000 in 2020.

OpenPredict changes the dynamic by giving predictions a liquid value, tradeable on any decentralized marketplace. Beyond prediction gains, this opens room for minting revenue.
Step 2.
Minting and Trading
Minting

For event launch, minters play the essential role of creating the market. Minters pay a 1% fee when they claim tokens. Whenever an "o" or "io" token is traded, the smart contract ties a 0.1% fee on the transfer and sends it to the initial minter.

This system encourages token minting. Furthermore, minters have the option to create liquidity for their "o" or "io" tokens on Uniswap and enjoy the trading fees.

Trading the "o" or "io" tokens becomes naturally desirable as the market notices a change in the the odds of the event. For example, if Tesla stock begins to perform very poorly, "io" tokens should go up in value and "o" tokens should go down in value, if the event was based on a positive price action for Tesla.

While minters pay a one-time 1% fee, they enjoy 0.1% from all subsequent transfers of those tokens. They also have the opportunity to enjoy all the liquidity fees on Uniswap.


Trading

Trading "o" and "io" tokens becomes naturally desirable if the market price of the tokens does not reflect realistic odds.

Suppose Tesla stock price is predicted to cross $3,000 in 2020 but Tesla misses its third quarter earnings. At event launch, all "o" and "io" tokens were valued at $100, there simply could be more "o" or "io" tokens, depending on sentiment at the time of event launch.

However, after weeks pass, and the company misses it earnings, Tesla stock reaching $3,000 becomes less likely, and hence the market should rightfully price the "o" tokens less and "io" tokens more. This is where natural trading volume comes into play to reprice the token.

The reason is that if Tesla is very unlikely to reach $3,000 in 2020, then holders of "o" tokens recognize the token will be worth $0 at event finalization and "io" tokens will get all the money in the pot. This leads to heightened sell volume in "o" tokens till the market feels true pricing is reached.

The inverse is true for "io" tokens. The market would buy out "io" tokens, pricing them higher as they will be more likely to win the entire pool of funds. If "io" tokens, in the example cited above, in which $30,000 is predicted on Tesla reaching $3,000 in 2020 and $20,000 is predicted on Tesla not reaching $3,000 in 2020, win, then $50,000 will be shared across 200 tokens.

This would drive tokens, that were initially price at $100, to be worth $250. Meanwhile, "o" tokens will be worth 0.
Secondary Product
TrustPredict
Despite the popularity of the trustless aspect of smart contract, there is still no simplistic UI where 2 or more parties can make a prediction on anything, without the need for a middleman.

TrustPredict is a simple dApp that enables 1 or more parties to make a prediction on anything with a form-life measure to explain reward situation. This enables everyday users who lack smart contract coding knowledge to easily launch a prediction without having to trust a middleman.
Secondary Product
oSwap
All "o" and "io" tokens will be traded on Uniswap, enabling fees for minters.

However, Uniswap's 0.3% fee may make rapid trading of "o" or "io" tokens discouraging. oSwap will be a swap network dedicated to the trade of "o" and "io" tokens of every event launched via the OpenPredict protocol.

oSwap will have a 0.15% fee, which is half of Uniswap's 0.3% fee. At initiation, OPT tokens be airdropped to minters who create liquidity on oSwap to drive more usage to oSwap.
Token Economy
Minting Fee
For each event, all participants pay a 1% minting fee.

Minting fees are used to buyback OPT from the market, and then burn them.
Escrow Maintenance Fee
At the time of pool distribution to the token holders that won the event, a 1% is dedicated prior to distribution.

Escrow Maintenance Fees are distributed to OPT holders.
oSwap Discounts
oSwap trading fees are 0.15%, but this only applies if the traders hold OPT tokens. If fees are paid without using OPT tokens, the fee is 0.2%. This 25% discount incentivizes active predictors to constantly hold OPT.
TrustPredict Maintenance Fee
TrustPredict will charge a trustless escrow fee of 0.5% for predictions that are shorter than 3 months, and 1% for predictions that are longer than 3 months. If the prediction
fee is paid in OPT tokens, the fee receives a 25% discount.

If fees are paid in OPT, the tokens are burned, if they are paid in any other digital asset, the tokens are distributed to OPT stakers.