Written by: Yue Xiaoyu

Events in prediction markets can be essentially categorized into three types of demand:

1. High-frequency gaming events

Purely transaction-driven, high turnover, and strong stimulation, fundamentally satisfying users' speculating and gaming needs, forming the basis for the platform’s trading volume and liquidity.

Typical examples include: 5-minute/15-minute Crypto price fluctuations, sporting events.

2. Cultural and entertainment events

Focusing on trends, fun, and topicality—highlighting enjoyment, participation, and social dissemination to attract new users and engage existing ones.

Typical examples include: Public opinion events, the U.S. elections, and the Spring Festival event marketing I previously attempted at Probable.

3. Risk hedging events

Tending towards practicality, rationality, and real risk-avoidance scenarios, fundamentally satisfying the professional needs of hedging and mitigating risk, determining the long-term value and compliant imaginative space of the platform.

Typical examples include: Macroeconomic data, pre-TGE, U.S. and Hong Kong stocks, gold and silver.

Further, it can be more closely tied to reality, creating real-world insurances: weather insurance (agriculture), earthquake/typhoon insurance, CPI inflation insurance (purchasing power insurance).

Thus, we can see the three-pillar theory of prediction markets: Prediction Market = Gaming Pillar (Volume) + Entertainment Pillar (Attraction) + Hedging Pillar (Value Creation).

Polymarket currently derives 90% of its trading volume from sports + political events, which means high-frequency gaming + entertainment, but is significantly lacking in risk hedging.

Ethereum founder Vitalik previously tweeted about prediction markets, expressing that they should not just serve "gamblers" as casinos, but should also act as more impactful risk hedging tools in the real world.

True hedging solutions are almost non-existent.

This also presents a larger market space and opportunities for new platforms.

If prediction markets focus solely on high-frequency gaming events, they are essentially a new type of casino.

There are two potential development paths for the future:

On one hand, there is a need for diversification, allowing more ordinary users to engage in trending events, which could indirectly achieve mass adoption of Crypto.

On the other hand, there is a need for specialization, to become a professional risk hedging tool that genuinely addresses real-world demands and issues; only this way can the ceiling of prediction markets truly be broken.

The development path of prediction markets is clear, and I will continue to work with Predict to see how far we can go!

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