Version: 1.0 Last Updated: Nov 8, 2022
With the emerge of blockchain technology, peer-to-peer interactions are feasible in decentralized and immutable manner. However, prediction industry still faces tight control from third parties. Future markets are manipulated and payout structures are shady & unfair. There are few dApps that are trying to combat this problem but still they are inefficient and centralized to their use cases. To bring mass adoption and trigger migration from traditional gambling industry to blockchain based solution, we need to focus on end-to-end decentralized user experience onto prediction markets.We introduce the PredictionDEX, end-to-end decentralized web3 platform to predict, trade and swap outcomes of future events. PredictionDEX has been developed over a period of 2 years with extensive user testing. Focused on user experience, we have implemented tokenization of future outcomes. People can create market, predict, own their prediction, and participate in markets without any middleman. Market transactions can be traced by anyone and become accessible to everyone, publicly verifiable through smart contracts.
1. Introduction to PredictionDEX
We envision PredictionDEX as an any-chain betting platform for predicting the outcomes of future events. Our mission is to deliver a Web3 prediction platform in a modular architecture that can support the open-source development of prediction markets. PredictionDEX remains capable of scaling into new markets with decentralized governance from the community. The power of blockchain technology makes prediction events reliable, transparent, and accessible to all users regardless of any identities. We aim for PredictionDEX to benchmark the standards of the "Decentralized Web3 Betting" protocol.
Image 1: PredictionDEX System Flow
This platform supports both fiat and cryptocurrencies as payment while BET token acts as reserved and only currency in market pool. As in Image 1, PredictionDEX self-sustains through its closed-loop ecosystem.
2. Ecosystem of PredictionDEX
There are multiple components of PredictionDEX that interact with each other to build an ecosystem. Here we will explore in detail (2.1) categories of users, (2.2) categories of markets, (2.3) accepted payment modes, and (2.4) fee structures.
2.1 Categories of users:
- Market makers: They are users or APIs to create prediction markets by filling up the information. Problems they are facing in existing platforms - they do not have the power to create markets, and they have difficulty in building their own markets. - Market hosts: They are users who make prediction markets ready for betting. Problems they are facing in existing platforms - they are unrecognized and unincentivized even though they kickstart markets. They deserve incentives for their contributions. - Bettors: They are users who do bettings. Problems they are facing in existing platforms - they are limited to a single blockchain and face payment issues, they lack a platform that can be understood easily in analytical data of prediction markets, and they face difficulty because of high entry fees and tough account setup to play or claim rewards. - Business Brands: They are users who do sponsors. Problems they are facing in existing platforms - sponsoring is expensive and not accessible equally for all brands. There is a lengthy process and centralized bidding system to appear as a sponsor of a market. - Admins/Governors: They are SC or maintainers who monitor and/or vote on the platform to verify and resolve issues.
2.2 Categories of markets:
- Sports market: Sports markets include prediction markets related to Football, Basketball, American Football, National Hockey League, and more - Crypto market: Crypto markets include prediction markets related to Prices of cryptocurrencies, Web3, Metaverse, and more. - Politics market: Politics markets include prediction markets related to US elections, World Politics, and more. - Science market: Science markets include prediction markets related to Weather, Health & Disease, Discovery, Nobel Prizes, and more. - Esports market: Esports markets include prediction markets related to Esports tournaments.
2.3 Accepted payment modes:
- Bitcoin (BTC) - Ethereum (ETH), Polygon (MATIC), USDT - Binance Smart Chain (BNB), BUSD - Solana (SOL) - Zilliqa (ZIL), Governance Zilliqa (gZIL), PredictionDEX (BET) - Elrond (EGLD) - Cosmos (ATOM) - Dogecoin (DOGE) - Fiats (Debit/Credits cards, ApplePay)
2.4 Fee Structure:
Transactions: - Each transaction of PredictionDEX charges 0.1 $BET with ZRC-3 implementation (no need for holding ZIL by users).Profile Changes: - To change anything like username, description, profile picture, etc. - a flat fee of 100 $BET is charged to save the changes.Creating Market: - There is no fee to create a market.Hosting Market: - There is a flat fee of 75 $BET tokens to host a market. But 50 $BET out of 75 is used for making a prediction. Host needs to choose one outcome of that market before sending the transaction. - For using "Free Host" coupon, user needs only 50 $BET token while hosting.Predicting Outcomes: - The minimum fee to make a prediction is 50 $BET. - For using "Free Bet" coupon, user places 50 $BET value token by paying 0 $BET token while betting.Featuring Market: - To place a market in Featured section, it costs 100 $BET for host.Sponsoring Market: - Anyone can sponsor a market with >= 100 $BET. This amount adds up in Prize Pool.Dispute Result: - Any user can dispute a market outcome result with 100 $BET collateral deposit.
3. Creating a Prediction Market
Anyone is able to create a prediction market in PredictionDEX. Creating a market costs 0 $BET token. Each submitted market are curated by Admin/Governor/System on first-come-first-serve model.
Market Makers are rewarded with 1% of the Total Pool as Xperience Points (XP) for each successfully hosted market. These XP points are tallied in the "Monthly Leaderboard" for receiving Game Playing Rewards (GPR).
- Market Makers can create a new prediction market by providing the following information: - Category of market - Sub-category - Title of market - Images [ max 2 ] - Outcomes - Prediction kickstart - Prediction end time - Resolution resource - Cancellation Outcome
Such created markets are staged for max 8 hours after which they are automatically available for hosting.
4. Hosting a Prediction Market
While the initial version of PredictionDEX supports FCFS (First Come First Served) hosting model, all markets in v3 updates go through a bidding process in hosting mechanism.
There must be a market available to host (created by market makers). Such markets will open bidding for up to 8 hours. The minimum bidding amount is 75 $BET tokens.
- User clicks "Bid Now" button to initiate the bidding transaction.
- If there is already a bidder, the new bid amount must be at least +5 $BET token than the previous bid.
- User submits the bidding transaction and waits for the bidding clock to expire.
- When the bidding clock expires, the highest bidder will be the host of the market.
- XP gained by the host of these markets will be equal to the amount of $BET they spend.
- The bidder who failed to become a host, because of a low bid amount, should claim their bid amount as a refund.
The minimum bidding amount of 75 $BET token is actually 25 $BET as host revenue + 50 $BET as the prediction amount on an outcome. In this bidding model, 50 $BET as the prediction amount is kept constant, and (the total winning bid - 50 $BET) is considered as host revenue.
5. Betting on a Prediction Market Outcome
There are 3 models for betting in PredictionDEX: (a) For-Against (b) Odds-Spreads (c) Tokenized
5.1 For Against Model
This model is the existing one that we currently have. In this model, winners get prize from the loser pool.
Total Pool = Winners Stake + Loser Stake Prize Pool = 75% of Loser Stake
Winner A gets = Winner A's Stake + (Winner A's Stake / Winners Stake) * 75% of loser stake.
If there is no loser, Winners will be at a net loss because of the gas fee. If there is no winner, 75% of the prize pool goes to the foundation (This 75 % is the winner's allocation).
Without a seeding, the initial better will not get prize information and they will not be motivated to bet. Admin will selectively seed the market to boost the betting activities.
5.2 Odds Spreads Model
When the Market maker submits the Market, System/Admin/Governor will analyze and flag it as 'Y' for the odds model and assign the value for the odds of each outcome by matching with the competitor's odds data.
- Total Pool = Winner's stake + Loser's Stake Prize Pool = Winner's stake * Odd Platform Profit = Looser Stake - Prize Pool
Winner A gets = Winner A's stake + 75% of Winner A's stake * Odd of winner outcome.
Platform Profit goes to the "Total Market Reward Pool". Even without a seeding, the initial better will get prize information because of odds data.
5.3 Tokenized Model
When the Market maker submits the Market, outcomes are tokenized. For each market, the sum of outcomes is tokenized for value 1.
Usually, most of the market outcomes are tokenized into two options: Yes and No. Such markets start with 0.5 "Yes" and 0.5 "No" probabilities. Bettors can buy, hold, trade and swap such tokenized outcomes within a market or across a different market.
The value of a tokenized outcome, at any point in the live market, is determined by the supply and demand logic using AMM (Automated Market Maker).
2.5% is the trading fee on Tokenized Model. 20% of 2.5% of all trades go to the "Total Market Reward Pool" and 80% goes to Liquidity Providers.
6. Trading & Swapping Market Outcomes
Trading and Swapping market outcomes are possible only in the "Tokenized Model" of betting.
In the beginning, all outcomes of a market have an equal probability. For two outcomes of a market, both of them will be tokenized with a value of 0.5 $BET each.
When the market goes live,
- users can buy outcomes.
- users can provide liquidity to the market pool.
- users can sell outcomes.
- users can swap outcomes across other paired markets.
When the market is closed/resolved, only one outcome holds the truth as value 1 and the rest of the outcomes hold the value 0. Any user making the correct prediction can redeem their tokenized outcomes for 1 $BET.
Liquidity Providers in the "Tokenized Model" receive a reward from “their contribution %” of 80% of 2.5% of all trades.
7. Resolving a Prediction Market
Markets are resolved by 2 processes: (a) Market Expiration Condition (b) Market Resolution Met Condition.
7.1 Resolution Met Condition:
When markets are live for betting, the “Request Resolution” button becomes active. Any user can click “Request Resolution” by paying 10 $BET as collateral. “Governor/Admin/System” will check such requests. If found valid, the requester receives 10 $BET back along with 100 XP in the leaderboard. This will change the market status to “Completed” with 1st answer from “Governor/Admin/System” and the “Dispute Resolution” button becomes active for 8 hours.
If “Request Resolution” is invalid, the requester loses the collateral and the market stays “Open” for betting.
7.2 Expiration Condition:
When markets reach the "Expiration date", market status is turned to “Completed” and the “Submit Resolution” button becomes active. Any user can click “Submit Resolution” and choose “Winning Option” by paying 10 $BET as collateral. Once the system gets 1st “Submit Result”, “Dispute Resolution” becomes active for 8 hours.
If no one disputes within 8 hours, Oracle will automatically verify the resolution, and the market turns “Verified”. The user who submitted “1st Answer”, if correct, gets 100 XP in the leaderboard.
7.3 Market Outcome Dispute:
If a user disputes, that user needs to deposit 100 $BET collateral. Resolution is then checked by “Governor/Admin/System”. If the dispute is valid, that disputer receives 100 $BET back along with 1000 XP. If the dispute is invalid, the disputer loses the collateral.
Once the dispute is resolved, the “Governor/Admin/System” will update the result, and the “Dispute Governor” button becomes active for 8 hours. If no one disputes, Oracle will trigger the correct result set by Governor/Maintainer to turn the market “Verified”.
For “Dispute Governor”, it costs 1000 $BET collateral. This will create an appeal in the “Governance Portal” for finality in case of disagreement with the “Governor/Admin/System” where official $BET voting takes place.
7.4 Resolution of Postponed or Aborted Market
If any market is postponed before "Prediction End Time", such market will remain open till updated "Prediction End Time"
If any market is aborted or cancelled without a result, such market will be resolved by refunding the invested $BET amount to Host and Bettors.
8. Market Reward Distribution Model
Each resolved market has "Host Revenue", "Bettor Revenue" and "Add-on Revenue" to build up a reward system. Aborted or Cancelled markets are refunded to the Host and Bettors only.
8.1 Host Revenue: Each market generates 25 $BET tokens as Host Revenue. This is distributed as follows:
8.2 Total Market Pool: Each market generates "Total Market Pool" as the sum of "Bettor Revenue" and "Add-on Revenue".
- Bettor Revenue is the sum of the "Total Win Pool" and "Total Lose Pool".
- Add-on Revenue is the sum of "50% Feature Revenue" and "50% Sponsor Revenue".
- Total Market Reward Pool = "Total Loss Pool" + "Add-on Revenue".
This is distributed as follows:
8.3 Revenue for the foundation
"Revenue for the foundation" is a specialized allocation in PredictionDEX dApp. All the seed bets, marketing expenses, and operations are covered by the foundation. This is an initiative for a long-term vision of making PredictionDEX self-sustainable and profitable for all investors involved. This reserve is filled up by:
- 5% of the total market pool of each market
- 50% of the featured revenue of each market
- 50% of the sponsored revenue of each market
9. Staking Reward Distribution Model
$BET token can be staked to receive $BET rewards which can only be used to change profile, host, bet, feature, and sponsor.
- Staking Reward Pool = 60% of Host Revenue + 5% of Total Market Reward Pool
- Epoch = 30 days comprising of accumulation and reward period. Accumulation Period = 25 days Reward Period = 5 days.
During the "Accumulation Period", Staking Portal starts accepting $BET deposits and starts accumulating rewards. Unlocked $BET can also be withdrawn in this period.
Once deposited, tokens are locked for 30 days.
When the "Accumulation Period" ends, the "Total Staking Reward" amount is finalized.
- Reward Period: Stakers must "Collect" the reward within 5 days. Uncollected rewards go back to the next Epoch.
Initiating a stake locks the token (along with previously staked tokens) for 30 days every time. The reward is distributed when "Collect" is triggered.
Claiming of Staking Reward is not available as all staking rewards are only used within the PredictionDEX platform. Users can utilize the distributed staking reward to change their profile, host a market, bet, feature, and sponsor.
10. Liquidity Pool Reward Distribution Model
$BET token can be pooled with DEXes available: $ZIL, $XCAD, and $CARB tokens.
- Minimum monthly reward is set 1000 $BET (this can be changed incrementally)
- Actual LP Reward (monthly) = 25% of Host Revenue.
There are two tiers for providing liquidity in $BET pool.
- Tier 1 = More than 500 $BET LP Tier 2 = More than 5000 $BET LP
- Tier 1 LPers can participate in lucky draw to get only "Free Host" coupon (5 coupons available each month). Condition: LPer must be 30 days old to get 1 try | 60 days old to get 2 tries | ….. | 150 days old to 5 tries (max limit)
- Tier 2 LPers can participate in lucky draw to get "Free Host" and "Free Bet" coupon (10 each coupons available each month). Condition: LPer must be 30 days old to get 1 try | 60 days old to get 2 tries | ….. | 150 days old to 5 tries (max limit)
LP rewards can be claimed immediately with a 0%-50% penalty. Claiming LP rewards within 7 days charges 50% penalty. Claiming LP rewards within 30 days charges 20%. Claiming LP rewards within 90 days charges 10% and there is a 0% fee after 90 days period. This clock resets whenever a "ClaimLPReward" method is called. Withdrawal from LP costs 0%-5% of the withdrawal amount as a fee. Removing LP within 48 hours charges 5%. Removing LP within 7 days charges 2%. Removing LP within 90 days charges 1% and there is a 0% fee after 90 days period. This clock resets whenever a "RemoveLP" or "addLiquidity" method is called.
11. Monthly Reward For Top Predictors(MRTP)
Every month, 40 Top Predictors and 10 Category-based Predictors are selected from the leaderboard, and MRTP is distributed for their contribution.
- MRTP rewards = 15% of the Host revenue of that month.
- Leaderboard will have the following information: - Rank - (Profile Picture) Username / Wallet Address - XP (Xperience Point) - Potential Reward - Total Bet Count - Total Host Count - Win Rate
XP = Market Maker XP + Host Fee + Bet Fee + Feature Fee + Sponsor Fee + Winning Prize + Successful Dispute
11.1 MRTP Distribution Process for Top 40 Predictors
Based on the XP count, the top 40 predictors are qualified to receive 70% of the MRTP reward every month. MRTP is distributed rank-wise as shown below:
11.2 MRTP Distribution Process for 10 Category-based Predictors:
Predictors can qualify in the following 10 categories to win 30% of the MRTP rewards. Each category receives an equal amount of rewards. - Most Active (Overall) - Highest Total Amount - Biggest single amount - Best Market Maker(XP Count) - Best Disputor (XP count) - Best Sponsor(XP Count) - Best Host (XP Count) - Best Sports Predictor (Win Rate) - Best Crypto Predictor (Win Rate) - Best Politics Predictor (Win Rate)
12. Payment Processing System
Users will be able to pay with both fiat and crypto options. The option to select the payment token will display the equivalent amount of the $BET token.
Users submit this transaction. If the token selected is $BET, the amount will directly go to "PredictionDEX Treasury". Other tokens and fiats, if selected, will go to "Swap Treasury" - which triggers the $BET swap of the equivalent amount and then sends this amount to "PredictionDEX Treasury" on behalf of the user's action.
Swap Treasury will buy bet tokens from the immediate market using the collected tokens. Users will receive or claim rewards always in $BET tokens by default while other payout options will also be available.
12.1 Free Play Coupon System
Users can receive a "free play coupon" to host or bet on markets. There are two types of coupons: "Free Host" and "Free Bet"
- Free Host: User gets 25 $BET off while hosting. This discount amount is filled up by Marketing Wallet.
- Free Bet: User gets 50 $BET off while betting. This discount amount is filled up by Marketing Wallet.
13. Smart Contracts
Smart contracts of PredictionDEX interact with all prediction market-related features: Creating Markets, Hosting, Betting, Resolving Outcomes, and Claiming Rewards. To start with, all users need their own account in PredictionDEX managed by a smart contract named "Profile".
13.1 Profile Management
First-time users can create their PredictionDEX account by connecting wallets or social media. All account profiles are transactional in blockchain and associated with built-in a wallet address. Since multi-tokens are accepted, multiple wallets can be imported within an account along with fiat payment gateway. All rewards are deposited in a built-in wallet address.
13.2 Prediction Markets
For each market category, a smart contract is deployed. These smart contracts interact with another smart contract called Oracle. Oracle helps in data feeding to update the market status. For reward distribution, Oracle further interacts with another smart contract called Prediction Market Treasury (PMT). PMT collects all revenues and distributes rewards to allocated wallet addresses.
PredictionDEX Market Flow Model
14. BET Token
In the PredictionDEX platform, the $BET token acts as "reserve currency". $BET token maintains a common denomination in all features of PrredictionDEX. Users can use multiple cryptocurrencies and fiat modes for payments and payouts as defined in section (2.3). These collected payments are instantly exchanged for BET tokens from the market.
The maximum supply of BET token is 2,000,000 and it supports 9 decimals. Tokenomics of $BET is kept minimalistic for fair distribution:
Vesting schedule and unlock dates for $BET token:
15. Future PredictionDEX
PredictionDEX team will consider the development of betting specific Layer1 chain in the future. Over the time, PredictionDEX will integrate updates in modular architecture. Parameters related to fee structures, payment modes, and reward models will undergo multiple iterations through governance.