Prediction markets like Polymarket can be more than just a place to bet on elections; they can also be a powerful tool with the “potential to create better implementations of social media, science, news, governance, and other fields,” according to Ethereum co-founder Vitalik Buterin. He calls this “info finance,” which is a discipline that starts from a fact you want to know and then deliberately designs a market to optimally elicit that information from market participants.
Buterin believes that platforms like Polymarket have been proven to be an effective source of information regarding U.S. elections. Polymarket correctly predicted Trump’s win with 60/40 odds and displayed that Trump had over a 95% chance of winning and over a 90% chance of gaining control of all branches of government, even as some news sources tried to keep hope alive for vice president Kamala Harris.
Polymarket’s two distinct uses include bettors using it to place bets, while others can read the charts, treating Polymarket as a news site. Buterin highlighted that he reads the charts of Polymarket as one of the steps in his “information-gathering workflow” and claims it has helped him “become more informed more efficiently.”
Buterin believes that artificial intelligence (AI) is likely to “turbocharge” info finance over the next decade by participating in prediction markets.
One use case for info finance is in decentralized Autonomous Organizations (DAOs). Many DAOs face a common problem of too many decisions to be taken, with most people not willing to participate in most of them. This leads to widespread delegation, which raises centralization risks and vulnerability to attacks.
Buterin believes that a DAO could use a prediction market, where humans and AI participate, to predict the votes for smaller decisions, with major decisions being voted on by DAO members on rare occasions. Info finance applications can solve “trust problems,” according to Buterin, and are further made possible now by affordable gas fees on blockchains.
Info finance “contains many potential paths to solving important problems in decentralized governance,” Buterin wrote. As more platforms like Polymarket emerge, the potential for using prediction markets to inform decision-making across various fields continues to grow.
