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Thinking about the future is common, and that's exactly why prediction market platforms boomed and generated revenue from that. In the last few years, prediction markets have grown drastically. People can bet on the results of real-time events like elections, sports, tech, and culture. Through analysing the real-time events and predicting precisely, people can earn money from that.
The rise in the prediction market is encouraging many people to develop their own prediction market platforms. Let’s see what a prediction market platform means and the development process behind it.
What is a Prediction Market?
Prediction Market is a marketplace that allows you to trade contracts or shares based on the outcomes of unknown future events. It allows users to buy shares of a probable event to make a profit when that event occurs or vice versa.
Types of Prediction Markets
Centralized Prediction Market - a mediator-controlled platform where the mediator manages the user data, risk controls, and settlements.
Decentralized Prediction Market - built on blockchain using smart contracts, which covers the market creation, trading, position accounting, and settlements.
Hybrid Prediction Markets - a combination of centralized and decentralized markets. Adopt centralized features like fast user interface, off-chain matching and decentralized features like on-chain settlements.
What is Prediction Market Platform?
Prediction market platform is a medium that allows you to trade shares on specific outcomes of real-world events. They run on event contracts that allow you to buy or sell a share on the outcome of that event. Some of the popular examples of prediction market platforms include Polymarket, Kalshi, and Hedgehog.
Steps Involved in Prediction Market Platform Development
Developing a Prediction Market Platform requires proper business planning and technical knowledge. Let’s see how a prediction market platform is developed in 6 simple steps.
Step 1: Market Research
Before moving into the technical development process of a prediction market platform, it is necessary to analyse the prediction market sector. Analysing competitors helps you to determine their strengths and weaknesses, thereby their gaps and unmet user needs can be taken into consideration while developing your platform. Choosing the focus area, for example, politics, sports, economics, or crypto pricing of your platform, is also essential.
Step 2: Technology Selection
Depending on the type of prediction market platform you are going to build helps you in selecting the tech stack. Select a technology that helps you to launch a high-performance, cost-effective, and scalable prediction market platform.
Step 3: Fixing the Prediction Market Model
Define the rules and regulations of the prediction market platform. The market models can range from the simplest binary instruments to the more complicated ones. Set the fee structure for executing trades and settling with an appropriate charge of 1-2%.
Step 4: Smart Contracts Development
Initiate the development of code on the blockchain. The smart contracts need to be written carefully, covering all the required information from trading rules to settlement mechanisms. The code should be bug-free.
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Step 5: Integration of Third Parties
Integrating third parties like trusted news outlets or verified data feeds helps in prediction market regulation. They are essential for determining the final outcomes of the real-world events accurately and transparently. A dispute resolution mechanism should be incorporated, which works in case the outcome is challenged. It temporarily freezes the fund and prevents premature payouts, protecting both the platform and traders from manipulation.
Step 6: Testing & Launch
Professional auditors should review the smart contract and the platform’s security features to ensure that it is secure for end users. The functionality and accuracy of the prediction market platform should be tested under controlled conditions. Once tested, the prediction market platform is ready to go live.
Key Features of a Prediction Market Platform
A top prediction market platform should contain all the essential features listed below for high functionality and accuracy.
Smart Contract
A set of rules for the working of the prediction market platform. It covers the data on how to buy and sell the shares, the computation of market positions, and the settlements after the outcome of the real-world event has been achieved.
Oracle Infrastructure
Enables fair and impartial market decisions through providing high-quality external data sources, thereby resolving the oracle problem in integrating external sources into the blockchain
Tokenomics and Reward Mechanism
It remains as the economic framework of the prediction market platform in maintaining liquidity, governing disputes, and ensuring long-term platform stability.
Incorporating Automated Market Maker
An algorithm that automatically provides buy and sell prices based on mathematical formulas rather than relying on the traditional order book system.
Types of Prediction Market Platforms you can Launch
Every kind of Prediction Market Platform has a set of users who are attracted. Here are some prediction market platform sectors that can be launched.
- Crypto Prediction Platforms - Includes events on cryptocurrency prices, platform liquidity and network data where the users can buy or sell shares based on the crypto-based events questions generated in the platform.
- Event-Based Prediction Market Platforms - Includes real-life situations, excluding financial and sports areas and concentrating on political, entertainment, and cultural events.
- Financial Prediction Market Platforms - Includes events that focus on economic variables like interest rates, inflation rates, and stock markets.
- Sports Prediction Market Platforms - Includes events focusing on the game result, individual players’ records, and so on. This kind of platform attracts users who are familiar with traditional sports betting
- Real-world Asset & Industry Specific Prediction Market Platform - Includes events that focus on property prices, crop production, and financial releases.
Benefits of Prediction Market Platform
- Prediction market platforms consolidate the views of many traders, producing predictions that are more accurate.
- Traders are motivated by potential rewards, encouraging them to make careful and informed predictions continuously.
- Binary option acts simple on real-world events, allowing users to make potential decisions with prices moving up or down based on the predictions.
- Continuous updates on the price in the prediction market are seen as it is incorporated with more real-time information.
Final Thoughts
No matter who the user is, the prediction market shows how people can turn guesses into real insights. The profit amount depends on the probability of the users who vote ‘Yes’ or ‘No’ on the event’s outcome. Prediction market platform creates an environment for users to trade on real-world events and generate revenue through their predictions.
Build your Prediction Market Platform with Fourchain, a leading Fintech development company . We help you build your Prediction Market Platform with an interactive user interface, flawless smart contract, and seamless functionality. Contact us today to build a top-notch Prediction Market Platform to stay competitive in this rapidly developing market.
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