Prediction market
A prediction market is a sort of decentralized (DeFi) market where participants can make predictions or betting on the outcome of particular events or possible future scenarios. To promote trust, transparency, and the equitable payment of bets, these markets make use of blockchain technology and smart contracts.
In a prediction market, participants can trade shares or tokens that indicate the possibility that a certain event will occur or that a certain conclusion would materialize. By purchasing or selling these tokens, market participants can take positions based on their beliefs or predictions.
The probability assigned to the outcome directly affects the value of prediction tokens. According to the participants’ combined knowledge, the probability of an occurrence or result increases, which raises the value of the related prediction token. On the other hand, if an event becomes less probable, the price of the token will drop.