In 2024, the blockchain world is at a turning point. Although big institutions are starting to see the value in this technology, blockchain-native prediction markets are emerging as the game-changing crossover "killer app."

The most exciting part is how these markets can provide accessible, relevant information about current events to everyone. This shift lets people tap into the “wisdom of the crowd” and play a role in shaping our understanding of what’s to come.

Rewarding Accuracy and Building Trust

In the book "Superforecasting," the authors suggest that some people have a natural talent for making accurate predictions. And with Web3 — which is intended to return value in the Internet experience to the users, it’s now possible to recognize and reward these "superforecasters" with crypto incentives.

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And then the potential integration of prediction markets with the broader DeFi ecosystem opens up a whole new realm of possibilities, like being able to use your prediction market positions as collateral in these protocols.

For instance, if you hold a position where the odds have moved in your favor on  a Polymarket or Azuro prediction market — one where your prediction is currently on track based on market odds — this position could be seen as valuable collateral because there's a real chance that it will pay out, giving it actual value.

It’s even conceivable to develop more sophisticated applications. For example, if you're willing to lock in your position for three months, giving up the flexibility to cash out instantly, you're showing strong confidence in your prediction. This level of commitment is then rewarded — perhaps by earning rewards through a DeFi protocol.

And this is just the beginning. Web3 prediction markets are set to revolutionize everything from gaming to social media, opening up new ways to engage and create value across different platforms.

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Picture this: You're playing a game like Roblox, Minecraft, or any user-generated content (UGC) driven game. Now, imagine being able to set up a prediction market inside that game, allowing people to predict what you're doing or what's happening inside your UGC. The possibilities are endless.

This concept extends to streaming and social media as well. Imagine streamers having prediction markets in their streams, with viewers predicting outcomes in real-time. For example, how many times will a streamer say a certain phrase? Who will win the next round? Will they beat their personal best score? These mini-games within games will transform user engagement and create entirely new revenue streams.

The Cultural Impact

Anything cultural is well positioned to become a topic for prediction markets. Just consider the excitement among dedicated fanbases, like the Beyhive or Swifties, betting on their favorite artist’s next big achievement.

Whether it’s predicting music chart rankings, movie box office numbers, weather forecasts, or even celebrity events, the possibilities are endless. And it's not just limited to major cultural moments — niche interests and local events also have their place in this model. The result is a vibrant and diverse tapestry of prediction markets that reflect the full spectrum of human interests and experiences. And, as a corollary, the expansion of information.  There are dozens of decentralized prediction markets already in operation, with some of the major ones being Azuro, Polymarket, and Betfolio.

Prediction markets are the killer blockchain app we've been waiting for image 0

Polymarket users favored Donald Trump to win the presidential election as of Sept. 10, 2024. Source: Polymarket

If something gets skewed disproportionately to reality, there's always someone who will pick up that opportunity. Let's say someone buys a position at 50/50, because they believe one outcome is going to happen. If significant money suddenly pours in overnight and the odds shift to 80/20 for the other side, with nothing fundamentally changing to justify this shift, they would buy the 20% position immediately because it's such an attractive opportunity at that price. The wisdom of the crowd would recognize this as a good opportunity. If you liked the position at 50%, you'd love it at 20%. This is how the market naturally rebalances itself.

As these markets continue to evolve and integrate with other aspects of Web3 — from DeFi to gaming — we're likely to see an explosion of creativity and innovation.  Don't just watch from the sidelines! The future awaits your prediction.

Brian Trunzo is Global Head of Business Development at Polygon Labs, previously heading up Business Development for North America and being the Metaverse Lead at Polygon Labs. Brian was a crucial player in bringing some of the biggest collaborations in the industry to life such as Fox Corp’s Verify on Polygon PoS. Prior to Polygon Labs, Brian was Co-Founder of BURRATA CORP. He attended New York University, as well as Villanova University School of Law.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.