Life is full of uncertainty. Nobody knows who will win the American election in November, when will GPT-5 be launched, whether Djokovic will win Wimbledon, or when Taylor Swift will become engaged. Until a few years ago, people tried to cope with this uncertainty by reading newspapers, polls, or listening to experts. However, these specialists sometimes lacked knowledge, or their predictions were biased due to bribery or coercion.
At some point, someone realized that humans are quite smart at making predictions when their forecasts are aggregated. A clear example is how well the market predicts inflation. The University of Michigan conducts a well-known survey called the "Survey of Consumers," which gauges consumer sentiment about multiple variables, including inflation. The accuracy of these consumer predictions is stunning. Yes, your average Joe who bets on GME because his friends on Reddit are doing so might not be the smartest person in the world, but aggregate multiple Joes and ask them about inflation, and their predictions will be surprisingly good.
Aggregating people's opinions is cool, but suboptimal. People might lie, even if the survey is anonymous and, more importantly, they typically lack the incentives to make a genuine effort to predict the outcome of the event you care about
Incentives drive behavior, a concept known since the Babylonian era when the Code of Hammurabi decreed that if a builder used low-quality materials and the house collapsed, killing the owner, the builder would be sentenced to death. This ensured builders had a strong incentive to use high-quality materials.
If people have skin in the game with their predictions, paying with their own capital if they are wrong and earning if they are right, they will put some decent amount of effort to be accurate. Some might even specialize in specific areas, becoming extremely knowledgeable in niches like politics to maximize their chances of making a profit.
Welcome to prediction markets. These platforms allow you to predict the outcomes of various events and earn a profit. While incredibly cool, they currently lack several features. Notably, you cannot freely create a market or bet on any market you want; you can only make predictions on markets that these platforms have approved. This limitation excludes many potential community-specific prediction markets from existing on them.
We have recently seen a huge influx of volume into prediction markets. Polymarket has seen approximately $315 million in volume as of the end of August, representing a 115x increase on a year-over-year basis. A significant percentage of this volume can be attributed to the upcoming U.S. elections, but we believe this trend will continue beyond November. Smart contracts allow for an order-of-magnitude improvement in prediction markets. Market settlements do not require users to trust a centralized company for either their resolution or payouts, while disputes can be handled in a much more transparent way. On-chain prediction markets allow for a more transparent pricing mechanism in which the odds of each market are set by the market, not by a centralized entity. They also allow for a much larger user base, as markets are settled in crypto, essentially allowing everyone to participate.
Despite the massive progress we've seen in prediction markets, we believe there is an unattended gap in the market. Prediction markets can become much more social in nature and enable a variety of markets that we haven't seen until now. We believe this can be achieved by leveraging Farcaster and its social capabilities. Furthermore, prediction markets should be fully decentralized, allowing users to create their own markets in a frictionless way. By doing so, Limitless will enable a myriad of different markets, particularly:
(i) Long-tail markets that are only relevant to a specific community. Imagine the medical community being able to bet on the effectiveness of a certain drug currently in a Phase III trial. The $DEGEN community could bet on how many token holders there will be by the end of the year. We could even see very long-tail markets where your local 200-person soccer tournament organizer sets up a market on Limitless, allowing bets on which team will win.
(ii) KPI-focused prediction markets. Projects could demonstrate their commitment by voting YES on a market asking, "Will project X ship feature Y by date Z?" Additionally, projects giving away grants could set up prediction markets where people bet on which grantee will achieve the most by a certain date, thus awarding grants based on the market's assessment of the best team. See Futarchy.
(iii) Daily, fast-to-settle markets. Many prediction market users don’t want to wait long periods for the markets they’ve participated in to settle, especially when the return is not particularly large. By allowing anyone to quickly create markets, Limitless enables the existence of 'daily markets,' where users can predict, for example, whether Nasdaq/ETH/COIN/other assets will close above a certain price tomorrow.
Now, a bit about the people behind Limitless. We are backing a top-notch team composed of CJ, who has a wealth of experience in the space after building a web3 social onboarding platform, and Roman and Dima, who built Reface, an AI app with over 250M downloads that scaled to a 130-person team. Reface was #1 on the App Store and Google Play in more than 100 countries. We have witnessed the quality and speed at which the team has been shipping, and we are excited about the new features that are coming up.
Additionally, we are very excited about how Farcaster will act as a catalyst. By leveraging the Farcaster community, Limitless will be able to attract users to create and bet on the outcomes of various events. We are convinced that Farcaster will host numerous communities (both crypto and non-crypto), and we are bullish on Limitless's potential to bring prediction markets to them.
Check out https://limitless.exchange and follow /limitless to learn more about what the team is building.
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