Written by: cookies
Translated by: Tia, Techub News
In this article, I focus on everything about Prediction Market Agents (PMA), including how they work and why I believe they will develop into a massive market.
• What is PMA
• PMA Mechanism
• DeFi Derivatives on PMA
• Why and How PMA Wins
• Existing PMA Projects
What is PMA?
PMA = Automated agents that help place bets in prediction markets.
PMA's betting is roughly based on the following two points:
User Preferences • Market types, such as culture, economy, politics, sports, etc. • Betting scale
Market Analysis • Brokers are responsible for finding Alpha • For example, Stephen Curry's injury = betting on the Warriors (Curry's team) to lose
PMA Mechanism
I have thought carefully and found that PMA can be constructed in various ways
• Single Market PMA vs. Multi-Market PMA
• Long-only PMA vs. Long/Short PMA
For simplicity, the rest of this article will be written in the following format:
• Single Market: Basketball
• Long/Short
Let’s build a PMA-B (Basketball Prediction Market Agent) • PMA-B will focus on basketball-related markets • A treasury will be launched for users to deposit funds. The treasury deposits will have a cap set based on the liquidity of PMA-B participating in the market • PMA-B will trade using treasury deposits based on its algorithms and sourced information • 2% management fee and 20% performance fee (based on profits)
PMA-B Token • Similar to the concept of creator tokens • Each PMA has its own token
PMA-B Token Utility • Staking for priority deposit access: the required staking amount may increase based on PMA's profitability • Management fees and performance fees will accumulate back to the token (in the form of buybacks/earnings)
DeFi Derivatives on PMA
Some interesting derivatives
Lending Market: If the market that PMA participates in has a longer maturity, that position may be used as collateral in the lending market. To better understand this concept, refer to Gondor
Alpha-Sourcing Agent: Another layer of agents that invest based on which treasury has the highest profits
Why and How PMA Wins
Prediction markets are going mainstream:
• Polymarket received a $2 billion investment from ICE at a $9 billion valuation
• Kalshi received investments from Sequoia and a16z at a $5 billion valuation
• Kalshi's trading volume exceeded $1 billion in the first week of October
With new liquidity injected, it may attract builders to create ToC applications on top of prediction markets, which may also mean participation incentives.
PMA has the potential to gain support from consumers and institutions:
Consumers • Generation Z's financial thinking is vastly different: earning quick cash (e.g., live streaming), saving less (heavily relying on BNPL) • Prediction markets describe themselves as "you can earn money while participating in your favorite activities!" For example, betting on markets related to Taylor Swift
Institutions • Diversified sources of income not affected by macro conditions • For example, Stephen Curry's performance on the court will not be influenced by Powell's statements
How can PMA win? I believe the key lies in the following points:
Model Advantage • Is PMA really good at capturing alpha returns? • Is it really making money and providing returns?
Interface • Smooth user experience • Integration with popular social media platforms, such as Instagram, Snapchat, Meta (Facebook), Xiaohongshu
Viral Spread • Will my friends see me making money through PMA? • Consider shareable profit and loss cards
Why choose PMA x cryptocurrency?
• Stablecoins: low cost, global access, allows for micro-betting
• Transparency: the betting records of agents are immutable
Existing PMA Projects
Some PMAs that are currently online: AIxBET, SIRE, Billy Bets Dev
Conclusion
The current scale of PMA is quite limited, with most betting on cryptocurrency or sports markets. I look forward to the expansion of markets like esports, and even niche markets like sperm racing and robot fighting.
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