A practical introduction to prediction markets by Clément Lesaege | Devcon SEA

it and you're going to be able to to try your prediction market uh live. So, let's start. So, the goal is to learn about prediction market and outcome tokens. And uh your goal for the game is going to be to have the highest amount of tokens. It's uh irrespective of what the other player have.

You don't want to have more token than the other. You just want to get the highest amount of token for yourself. So, prediction market basics. So, what is a prediction market? Uh a prediction market is a way to make prediction about the future uh using markets where people can place order on what will happen.

So, for example, uh who will win the US election? You can get tokens of Trump. You can get token of Harris. And if Trump wins, well, the Trump token will redeem for some money. If Harris wins, the Harris token will redeem for some money.

And by looking at the price of the token, you can make prediction about the future. So, this can also allow you to get more complex signal such as, for example, what will be the price of Bitcoin if Harris wins versus what will be the price of Bitcoin if Trump wins. And what do we need to make a prediction market? So, you need a question. You need the list of outcomes.

Like, who will win the election, for example. You need an oracle. You need a way to report the outcome of this market. So, for example, Reality or and Kleros. Uh and I see the Reality founder there and a lot of Kleros team there.

You need a time where you can start uh to uh resolve the market. And obviously, you need to get the underlying token, what you will earn if your prediction is successful. So, the basic of prediction market, you will have uh one token that we'll call the underlying token. So, here in my slide, it's die, where you are here uh is going to be the coin that you have. You put it into this market, and then you will get one token of each of the potential outcomes.

So, here you put some die, and then you get some token for the Democrats winning the election, the Republican winning the election, or something else winning the election. And when you look at the price of this token, that gives you some probability of this particular event happening. So, we're going to start our first game. So, before that everyone, take 4 500 worth of coin. So, pod leader give 500 worth of coins to everyone in your pod.

500 worth of coins to everyone in your pod. Oh, we don't have any pod leaders there? Who is the pod leader? There is no pod leader there? Wait.

Uh Can Can you Can Can you be pod leader there? Yeah, is this pod? What What's happening? Uh the people at the back are empty. They need someone there.

Or I can ask everyone to get up and change. There is no pod leader over there? Do they have Do they have the coin or not? We have points, yeah. Uh maybe Maybe Mick Mick, can you take this pod?

Do they have Do they have cards? No, you don't have cards. There is nothing here. I don't know how you even got the coin. So, if you want to play, you have to go in the some other pod.

This has to be empty. So, now pod leaders, take the first sheet of any MM, which is cattle and dog, and put a token where it's in bold, italic and bold, on both of the markets. Put a token where it's in bold. Yeah, you have to take your the sheet here, and the cat and dog. Uh the cat Cat and dog.

Everyone take a cat and dog. Is there a pod leader here? There is no pod leader here. Uh wait. Yeah, you take it, and you put a a coin I gave you a coin on the bold stuff.

So, put the coins Put the coins there. You know Yeah, this the small coins. You put the small coins for the AMM. You have it? You have it?

You have it? You have it? Okay, this is working there. You have it? You have everything?

Okay, you have here. Okay. What? They should be polite everywhere and they should be polite everywhere. Like polite leaders who should be able to educate the AMM.

So, if anybody has some issue and do not have the dog uh the the cat or dog paper, raise your hand. If anybody has an issue. Okay. So, you all have the 500 coins, right? Everyone has 500?

Everyone has the market maker sheet? Okay. So, now what you can do, you can buy cat tokens if you think that it's a cat or you can buy dog token if you think that it's a dog. And the price is given to you on the AMM sheet. And what you can also do if you wish, you can give a 100 coins and get a complete set of both.

So, you have opened the box A, right? You have opened the box A? Okay. So, now you can start to trade on this this AMM buying or selling tokens of cat and dogs. And if you have any question at any point, don't hesitate to raise your hand.

Yeah. So, you have the you have your coins? No, you don't have your coins. Wait, wait. Let me I I will come back with you.

Uh one Wait, that one is here? It was it not have the coins? So, you need to have the coin here on your pod. Cat and dog, so you have the coin here, okay? So, this means that you can from the bank you can buy token of cat at 50 and then you move it up.

Or, you can buy token of dog at 50 and then you move it up. And Yes, and you have to open the box A. Has everyone opened the box A? Pod leaders, have you opened the box A? Yeah, open the box A and you will see the token.

No, no, that's that's the box A. So, here we need a pod leader. Uh Plinio, can can you can you be pod leader there? Just take a seat here and uh take a seat and lead this pod. So, what is here?

We don't have pod leader here? Where is the pod leader? Are you leading a pod? Are you leading a pod? Uh So, here.

So, each chip uh each 100 they they get one? That's the cat and dog one. You have the cat and dog in the box A. So, here you you can buy at this price and you can sell at the price just above. Any amount?

One by one. You can have like if multiple people want to buy at the same time, yes. Yeah. So, can I shove on that? Or how what's my size can I bet before it moves the order up?

can do one by one. So, you have here you have dogs. So, if How much size can I put in before it moves the order? It's only no, it's only one by one. So, you have to pay 50.

You pay 50. 50, okay. That's my max size I can do at this price. And now it's moving, yeah. Okay.

You put that back into the bank. Okay. How much cat? Cat. Let me bag holding.

I have the cat. Cats? Then you we get the cats. A cat bag holder. So, here and this he's going to um move the cats.

Thanks for the exit liquidity. The dog price is too good now. So, do we Anyway we can understand what is Yeah, because there should be a pod leader here. Why don't we have a pod leader here? Um Oh, you are here, right?

Okay. Can you lead this pod? Yeah, yeah, yeah. So, it's 50/50. I was talking with Rodrigo.

Okay. Yeah, that's it. Do you have a pod leader here? Oh, yeah, you have a pod leader here, okay. Yes?

Yeah, you have the coin, okay. Put it and start to handle your pod. Okay, here well well here's the reason. You have the pod? So.

Oh, thank you. You are starting here? And every time you move, you are going to move the the coin. And what you can also do is you can give 100 and get a complete set, so both the cat and the dog if you want to sell them after. What?

Cat and dog are in the cat set in the pack A. It's in the pack A. Yeah, open it it is inside. So. Clark, can you take this pod?

Take take the chair the chair here and take this pod. So. So, how if they give me 100, they should get one? If they give you 100, they should they get set and then the cat also. Okay.

So, for for example, he's giving me 100. Yeah. Uh so so what what do I do? What do you want to do? You want to buy cat or you want to buy dog?

Buy cat. So, you can you can only give 50. Give 50 and you will get one token of cat. Okay. 50?

Okay. the token of the small small one. And then you move cat up. No, no, no. You you just you just put it in the in the bank.

Now you have to pay 60 for cat. Oh, what you can do if you want you can pay 100 and you get a complete set. So you get both cat and dogs. And you you can use it to sell it. But to sell it you sell to the price above.

You buy to the current price and you sell to the price which is just above. No, you can either buy to the AMM here. You either buy to the AMM. Okay. Or you are minting a complete set.

So you give 100 and you get both. Yes? You should put 200 you will get both of those, yeah. You will get both sets. You get both sets if you put 200.

And then after you can sell it if you want to take a position. No, no, you can sell it here to the AMM. You can go and sell it there. Yeah. Uh wait, here?

Uh you you need to be in the middle of the pod. It's not going to work otherwise. Go to the middle of the pod. Yeah. Can can can you Move move one one here.

Can you both move one on the right? And and go here. So what's happening here? Are you Okay, which is still at 50. Yeah.

We are not understanding. So, are you in a pod where there is a pod leader? Do you have a pod leader here or not? No. If you don't have a pod leader, go to a pod where there is a pod leader.

Oh, you're the pod leader? Okay, so yeah. Are you under the pod? Can you please explain this part? So.

So, we can we can we can pay 100 to the market maker And one dog. If you pay 100, you will get one cat and one dog, right? Or you can pay to the market maker the current price, but you will get only one side. And when you do that, you're going to move the token. Okay.

If you buy one cat, it's going to the next cat is going to cost 60, right? You can also sell, but you sell to the price which is above. And also you move the token. Yeah, like the bank is going to give you back the money. The bank can do the You're the bank?

Yes. You're here, and you will give back the money. So, you What do you want to buy? You want to buy a cat or a dog? Okay, let's start You want to buy a cat?

So, you give 100 to the bank, okay? You will get 50 back. And you also get a cat. And now it's moved, and now the next cat is going to cost 60. Yeah, that's not the right cat.

That's the Yeah, this is 100 cat, yeah. And does this one move? This is a dog, yeah, and you can buy it, and it's moved. What? It's independent, yeah.

Okay. What So, what what are you doing What are you here? Do you have a pod leader here? You don't have a pod leader here, right? Oh, no.

You have a pod leader, right? Are you the pod leader? So, you have cats and dogs? We don't have the cats. We all get to gather them up.

Okay. So, you have opened the box A? You gave the box A there? How many How many you have to bring in? No, so you have the the cats and dogs over there.

So, what have What have you done? Like, you you split into how many pods here? Are you how many How many pods? Yeah, ju- just do what one pod uh No, I can't do mission two pod. We have to split into the three group or we should try to do the two.

They have no pod leader? Okay, they don't have the cats cuz they got the dogs right. They They have no pod leader, none of these three. So, can you do a pod leader? Can you do a pod leader there?

All three of us are in different place. W- Why do we have three things here? What is that? Why is that? This pod this is not the here.

It should be done by how much was Yeah. Is it possible to buy yourself more than one? No. One by one. One by one.

Yeah. Is this the prediction market option? Yeah. I mean, that's going to be hard to get if you are just arriving now. Like, it's already way more people than expected, so I can't get anyone in, sorry.

Yeah? Does the price of one token influence the other? No? No. So, what you can also do, you can give 100 and get a set of both tokens.

Yeah, we can do it in the middle of the round as well. Yeah. So, if you want, you can give 100 to the bank and get both cat and dogs. That can be useful if you want to sell them. Because here, the price of both are increasing, so you can get some profit by giving 100, getting both a cat and a dog, and selling both.

Yeah. Is that correct? Yeah. So, here there is nothing, right? Yeah, you sell it to the price just up, yeah.

And you're moving the price. You sell both? Yeah, and so you pay 100 and you got one So, you got 40 of profit. So, it's not buying, it's a minting, so you are minting complete sets. Yeah.

For 100, you get both. No matter what the price, yeah. So, do you have the pod leader here? And that's the current Okay. And it's back to 50/50, right?

It moved up and down, it's back to 50/50. Okay. Okay. What is the price still 50? Did you do Okay.

Okay. Okay. So, what what do you want to buy, cats or dogs? You want to buy dogs, right? So, where are the tokens?

Where are these? So, and where are the cats? Where are the cats? Uh over there. Where are the cats over there?

Like are you Okay. You got no one to show. I I got it what I understand. So, the here is the cat is a cat and dog, right? Yes.

Oh, okay. You got this cat is both like this. So, two categories inside, cat and the dog. Yeah. So, we didn't know this.

Cat have to be put in the back there. It's not like you think that this one. So, they're going to like Just merge the pod. Like just go all around in the middle and merge your pod. Do only one pod.

You You only have the one set of cat. Do only It's only one pod. Yeah. Okay. So, everyone move towards the center to make your pod.

Put this in the center. So, do we still need that chair? Put this here. Okay. Do we still need this chair?

You have your sheep, right? Yeah, 500. So, now you can buy cats and you can buy dogs. So, I have to separate all the cards, is it? So, you are the bank, right?

Do you think you can under the pod? You can under the pod? Under the pod? You can under the pod? Like how?

So, you are playing the bank, right? Okay. So, if you are there, please go closer. If you are there, please go closer. This pod does not exist.

This is the pod. So, I can become a buyer. So, you want to buy? Uh cat. Okay.

So, if you want to buy cat, where are the cats? Here. The cats are here. So, you need 50? You need 50?

100. You pay 50. You pay 100, right? You get 50 back. And you get your cat.

And then the price of the cat is increasing. Oh, okay. Okay. Okay, this is 100. I pay 50 back.

Everybody Everybody can do the same thing and get two cans of cats or dogs. Okay. So, right now if 60, it becomes I want to buy Buy cat, I have to pay 60, right? No, you have to pay 60 to buy a cat. And then it's going to go to 70.

And it's going to go to 70, yes. This doesn't move? This doesn't move, no. But, what you can do at any time is you can pay 100 to get a set of both cats and dogs. Okay.

This is the first round. This is the only thing. Yeah, yeah. There's only one cat. No matter how much I buy, it's always one cat.

How much what? No matter how much I bought, it's always one cat only. You will get 100 if it's a cat. See, I know. Uh If If cat, you will get 100.

Oh, okay. Yeah, now you buy 60. You get one cat. And this is going up. Okay, here.

A consensus, yeah, yeah, that's okay. That that's good. So, what you can do is you can pay 100 to get both cats and dogs. And in this case, you can make some profit, right? I don't know, it's okay.

Yeah, yeah, no actually. So, if you pay 100, you will get both. And you can No, you can sell it only you sell it to the app. So, you will sell it only for 90. So, it's not going to work.

Yeah, you're right. It's going to work, but you're going to lose money. So, for now, the prices are good. Yeah. Hey, one question.

Yeah. Can you mint multiple times? Yes. Yeah, show show me. They should talk.

They should talk, it's normal. So, what's happening in this one? If we If we sell If we sell a dog, Yeah. we we get 50? No, you get the price up.

So, you will get 40 only. 40 40, you'll get 40 only. So, sell one by one. So, you sell one dog, right? So, it's going to go here and you get 40.

Ah, okay. So, you get 40? Uh, two of those. Yeah. Okay.

Okay. Okay. Now you Now it's your turn. You can like as long as there is no multiple people wanting to play at the same time. You can play whenever you want.

If you are multiple, make a queue, but uh Do we need Do we need that to to sum up 100 always? No. No. No. It doesn't need to sum to 100, but you can give 100 and get both.

Okay. So, you This part is working? We're done. Yeah. And you are you are You stay at 60 60?

Okay. Yeah? You can trade with another player if you wish. It's okay. Minting doesn't move the price.

No. Yeah? It doesn't need to sum up now. Yeah. It's a price.

Yeah. a price, not a probability. Okay, so everyone finish? So Please, if you have any last question, tell me before we finish the first round. What?

What is it? Okay, any last question? Is there any last question? All the pods are working? Okay, okay.

So everyone, we're going to now stop the AMM. Oh, wait. Last order, we're going to stop the AMM. Last order, last order. Do you have a last order?

Okay, so everyone everything is done. Perfect. So, please party leader, close the AMM. And so now we're going to First, if you if the price of the dog in your pod Yeah, you the AMM are closed. It's not possible to trade anymore.

If the price of the dog is higher in your pod, raise your hand. If the price of the dog is higher, raise your hand. Here the dogs are higher. The dogs are higher here, okay? The dogs are higher, okay?

If the cats are higher, raise your hand. If your pod has cat price higher, raise your hand. Okay, cat price, cat price. So, we see four pods with cats being higher and three with dogs being higher. And so now you will get the reveal, and that was a cat.

So, now if you have dog tokens, they are worth nothing. And if you have cat tokens, you can redeem them for the amount of point written on them. Ah, okay, okay. wildly They are asking if they can keep the card as a souvenir or Yeah, you It's okay if they can keep the card. It's okay.

Okay, so did you all manage to redeem? If there is any question, raise your hand. So, no question. Let's go to the next element. So, now we're going to open another market.

So, this is going to be a market about whether or not I'm going to say the word there in the mic. If I'm going to say the word there in the So, if within 10 slide I say this word this specific token, the token on the left is going to redeem. Otherwise, that will be the other token which will redeem. So, all all the pod remove the cat and dog AMM since AMM is over and take the second AMM about this particular word that I can't say or maybe I will say it. We will see that.

Are you trying to trick me? So, if this word if I say the word if I say the word you will get the token on the left which will redeem. If I don't say it within 20 slide, you will get the token on the right which will redeem. And Bun Bun, where is the suitcase? I need the suitcase because there is your stuff inside.

I need the suitcase. Where is the suitcase? You have to find out as soon as possible because if it disappear this like under during the workshop. No, you can keep the card if you wish. Yeah.

Is the question is whether or not I will say this word. Someone is trying to trick me. Where is the big suitcase? Where is the big suitcase? Like someone took my big suitcase.

Oh, yeah. What happened? Like where where is the content of my suitcase? Yeah, the content disappeared. Like I have some content for the workshop which disappeared.

Uh that's probably about 4 or 5. It's okay. It's okay. Yeah, it's okay. I have everything.

So, one interesting thing that we are seeing here is how the market can potentially affect reality because I see a bunch of people trying to make me say the word. So, it's not necessarily the main goal of prediction market, but you could potentially use prediction market to uh incentivize particular stakeholders to do a particular thing. Uh you you could see that. So, here we have a participant uh who is saying that it's a something similar to an assassination market. I don't think prediction market are very suitable to make assassination market, but uh they could inadvertently become one.

And that's why you have to make sure that your rule do not allow that. So, for example, in Claros, we have uh as an arbitrator, we have a set of rule on what we can rule and what we cannot rule on. And uh market which are unethical are going to be uh ruled as invalid. So, they will not uh resolve normally. And uh this for example happened uh couple of week ago where you had a question about uh some Hamas leader being removed.

Like Hamas Hamas leader being in control of Hamas. And obviously, the most likely way that he will not be in control will be him being killed. So, here's the oracle returned that it was an invalid market. Yeah. Yeah.

Yeah. He So, for us, if the main source of uncertainty is something which is immoral, we will refuse to arbitrate. If there is other sources of uncertainty, like for example, if Trump was assassinated before the election, we'll probably arbitrate because the main uncertainty is not whether Trump will be killed, it's whether he will win the election or not. So, the main source of uncertainty is the vote of the American people, not the potential assassination. So, there we would have ruled on this market.

Well, at least that's that's for me. I would have ruled this market as valid as valid. Yeah? You you trade within your pod, only within your pod. Yeah.

Yeah? Sometimes they want to say in the exchange and then it's Yeah. If you If you sell, you sell to the price just above. So, if you sell, you sell to the price above and you move it. Yeah.

It doesn't need to be balanced. The markets don't need to be balanced. If the markets are unbalanced, what you can do is give a 100 coin and get a token of both. And you can make some profit. If you want, you can give a 100 coin and get both tokens.

And then you can sell them. You you can always get both for 100. That's good. Yeah. If you want, you can also You can also give those back and get 100.

No. You can if you want to get 100, you have to give a complete set. You get the price just above. Okay, just above. Yeah, just above.

Yeah. No? Okay, so sometimes markets do not resolve immediately. So, this market is going to stay on because for now it's still undetermined. We still don't know if I'm going to save the world or not.

And we're going to go to another market. So, another type of market, please everyone everyone, we're going to explain. Please everyone silence a bit. Thank you. Yeah, so another type of market is scalar market.

So, not only we can predict event, but we can also try to predict values. So, for example here, we would want to predict the inflation in 2015. And to do that, we set up a range. We can say from 0 to 10%. And now we would have some up token and down token.

So, if the inflation is higher than 10%, the up token are going to redeem. If the inflation is lower or 0%, the down token is going to redeem. But if the inflation is actually within the range, so between 0 and 10%, both tokens are going to redeem proportionally. So, if it's 8%, the up token is going to redeem for 80 cent, and the down token is going to redeem for 20 cent. So, this is interesting because that's how you can estimate value.

And if you saw at the start of the workshop, I was showing you the Bitcoin price market. And this was a scalar market to estimate the value of the Bitcoin price. So, now we're going to go to this market about my age. So, you can go on the age market. And the goal is to find how old I am.

So, if I'm like 40, for example, the up token will redeem for 40, and the down token will redeem for 60. So, everyone know and keep the previous market. The previous market about the world is still open. You can still trade on it if you want at some point. So, open the speaker age market.

And in this market you you obviously know I'm not a negative age, and I'm not 100 years old. So, the tokens are going to redeem not completely. Both tokens are going to redeem, but you you don't know exactly for how much. So, if I'm older, the up token is going to redeem more. If I'm younger, the down token is going to redeem more.

Yeah. That's E. I know, but I'm not going to reveal it. At least not yet. That's B?

You have B? You don't have B? I can give you a B. We don't have the speaker ones. We don't have speakers.

in the pack B Yeah, this one is the pack B. B or D? B and uh D is So, if you are missing it, I have a pack B. I have a pack B. B is candle.

B is candle. This is weight. How much weight is it? No, no. How much weight is it in each pack?

Okay. only one thing. So, you have it. This is uh pack B. So, you have it in the pack B also.

We don't uh Oh. Is that for 70? So, the starting prices for these? So, Starting there? Okay.

So, what's which token you want to buy? So, you want to buy So, okay. So, you pay 30. The price increases here. And you get the No, that's the weight.

That's not this. What is this? The That was an eight. So, If you buy So, So, here you are not necessarily betting on something in the abstract. You are looking at the current price.

So, here your price is 32. So, if you think that I am older than 32, you should buy up. Exactly. So, you should have your Like, for yourself, you should have some estimate of what is my age. You look at the market.

Is the market correct? Don't do anything. If the market you think is incorrect, you can either buy up or down whether or not you think this market is too high or too low. You think it says I'm 32, yeah. Here I say I'm 32, exactly.

This is the price of the down token. The down token is going to redeem to 100 minus my age. So, So, if you think that I am younger, if you think that I am younger than 30, you can buy the down token. Yeah? Yeah?

Uh can you pick up a pod? Pick up a pod and ask the the pod leader. You need an oracle? And I'm working at Claros, which is an oracle. Hi.

Yeah. Let Let me see your face. I saved 2 days ago. What? The maximum is 100.

So, the age up token is redeeming for my age. The age down token is redeeming for 100 minus my age. Yeah. This is one is younger, yeah. This is age upper.

Oh, no, no, it's not age token. Age down, this one is age down. Age down. Yeah. So, you So, here it's not about exactly just what you think.

It's about whether you think the market is overvaluing or undervaluing. So, here you have 68. So, if you think that I I uh younger than No, younger than 32. Younger than 32 because you have to do 100 minus the price. If you think that I am younger than 32, you should buy.

And if you think that I am older than 30, you should buy the up token. Okay, I got it. Thank you. I think I get it. So, how old do you think I am?

34 or 30? Yes? You mean what? What are we supposed to bet on? So, here, you are not making a bet in the abstract, but you are predicting whether uh my age is higher or lower than what this market is currently giving.

Currently, the market is giving 30. So, if you think that I am older than 30, you should buy the age up token. If you think that I am younger than uh How How you have How much you have to pay for that? Then How much do I have to pay? cost for that?

Well, it's here. You can see here. Tell me about it. Tell me how much it is. So, if you want to buy the age up token, it's uh 30.

And it's going to redeem for my age. So, if you think that my age is above 30, you will make some profit. But if my age is under If it's under 30, you will lose some money. So, you are not making a prediction in the abstract, you are predicting toward the value, not just an outcome, toward the value. And for that, you have to look at market prices.

Okay. Okay. The age up is the one with the old guy, and the age down is the guy with the one with the young guy. Yeah. Okay.

So, I'm 34 here, okay? I'm 36 here. Yeah? Yeah. So, if you think that I'm older than 30, you can buy age up because he's going to redeem for my age.

If you think that I am younger, you can buy age down because So, that's the opinion. Because age down is going to redeem for 100 minus my age. No, you just put this one. This one is just in just like three This one is just three of these. So, don't don't bother with this one.

You think age is too many people, but This is the token you want to use, yeah. Yeah. So, here you have to look at the market and if you think the market is underestimating or overestimating my age. So, here if you think that I am older than 30, you should buy up. If you think that I am younger, you should buy down.

What way? You done? So, it's you for now you have to pay 70. And And this token is going to redeem for 100 minus my age. This is one is 100 minus my age, this one is my age.

Yeah? Yeah. It's 100. You You can mint a complete set and sell the age down if you want to. So, to mint a complete set, you give 100 and you get both.

What? Yeah. If If the price are too much diverging, that's the profitable strategy to give 100 and get both. So, sometimes you can make profit by doing that. To my age, yeah.

Okay, if you're in the last question before we close the market. Okay, so now we're going to we are closing the age market. The world market is still there. So, everyone, we are closing the age market AMM. And I'm 32.

So, this means the up token are going to redeem for 32 and the down for 68. I've looked at the few pod and we could see the age in the pod was between 30 to 36. So, maybe on an average maybe 33. So, we can see we had a pretty nice estimation of my age with this mechanism. So, you can redeem your token.

Yeah, if you have any question, don't hesitate to raise your hand and I will come help. Yeah. From Augur? Um Cleros is a let's say a scalable version of Augur. And also allows different sort of use cases because we have a a tree of courts.

We have a tree of courts. Yeah, so Augur is just doing prediction market. Well, well, now it's not doing much because it's more or less dead. But for Cleros, you can have prediction markets, you can have anything. You can have curation.

Uh you can have some insurance. And as a juror, you're going to stake in a particular court. And you're going to be drawn in only in the court that you are specifically want to be participating in. And also, contrary to to Augur, with Cleros, you will be randomly drawn. You don't allow everyone to put to stake on anything.

It's only the jurors which are drawn. So, most of the time it it takes only a small amount of work from jurors. And then Augur is a bit similar, but Augur also you choose your own dispute, while in Cleros you don't. In Cleros, you choose your court, but not your own dispute. But most projects at least like both mechanism are pretty similar because we are both staking We are both taking this from Trust Coin.

So, Trust Coin was this chain coin mechanism made by Polystark, except the guy was a maxi, become a maxi, so he never managed to release the It was Trust Coin. Trust Coin set up this mechanism. uh but they never released like the guy was wanted to make it on Bitcoin, which was I think uh infeasible. Uh And uh Augur Augur is looking a bit similar to uh Augur mechanism. Um Okay, what is a mix of both, let's say.

Uh but it's a you vote everyone votes on everything. Uh but also keep in mind like Polymarket is using UMA. Uh but in practice like they have some admin keys, so it's not like a a real decentralized usage. Polymarket is Oracle is working so he's remarking a call to UMA. Um but also they have some admin which can overrule UMA if they want to.

And UMA is everyone votes on everything. Okay, so now we have another market. Which is going to be a scalar market, the weight market. And here I have some item that we can light to make smell. Uh the made by Ponpon, by the way.

Uh and so what you're going to do is you're going to try to determine what is the weight in gram of this item. Someone's to try it. So, you have this item. And what you have this item and you have to try to determine the weight in gram of this item. So, everyone takes the weight AMM, set up the weight AMM.

You can still keep the word AMM, the word AMM is still there. And now you have the weight AMM where you want to estimate the weight of this item. Well, if you are blind, you should probably not participate in the market. So, if you want to see the item I'm showing the item. No, you can't feel it.

Can you see it? Yeah? You can take a picture if you want to. No, or you can touch, but you cannot weigh it. SOMEONE IS TRYING TO TRICK ME AGAIN, you know?

Yeah. That's the item. It is. What is the weight in gram of this item? Yes, it is.

Only look. Only look. Uh it's an item. It's smelling nice. You can smell it, you know?

The item. It's a to make some nice smell, you know? You can smell it. No, don't don't don't touch it because it would be unfair and I don't have time to It's done by my girlfriend. So, the item So, you try to estimate how many grams.

No, there is not too many people, so we will not have time to get everyone to Someone is cheating. Someone is cheating. You can you can take a picture if you want to look at it a lot. It is just done by my girlfriend. It's not a brand like it's It's made in my kitchen.

Uh this is a up token. The whole thing It's the whole item, not just the wax, the whole item. So, if the weight is above 40 g, you can buy up. If you think the weight is below 50 g, you can buy the down token. Only smell it because it would be unfair.

I don't have time to give it to everyone. So, did you all manage to determine the weight of this candle? Keep in mind, the markets are still open. The markets are still open. Yes?

Yeah, the markets are still open. The markets are still open. Keep in mind. I can defend once. I can defend this.

I'm the one who made it. What? It's available. I made it. Oh, okay.

I So keep in mind the market is still open. Still open. Oh, this market Yeah. This market is still open. You can still buy here.

Yeah. Yeah. Yeah. That market was instantly closed. No, that's the point.

That's the point I'm going to make. Yeah. Yeah, it's still open, yeah. Yeah. So keep in mind the market Both markets are still open.

I can't un-say it. It's not possible to un-say it. Yeah. Yeah. Yeah.

Oh, this one you can remove. It's finished. Okay, so now we are closing the candle market. The market of the candle is closed. So everyone, silence, please.

Everyone silence, please. So here, we have this market on whether I will say the world candle. But the issue with this market is that we will not really know when we will know because you will not know when I will say it and you will not know when I will or you will not know when I will go to slide 20. So for you it's good. You are traders.

You can make some money like you have something which is known and you can get basically free money by buying the token candle. But for the liquidity provider is very bad. And so for a lot of markets where we don't know when we know, it's extremely risky to put liquidity because as soon as the answer to the question is publicly known, people are going to jump on the AMM and take all the token of the right answer. So here, if you are here about the about the candle, immediately you're going to go to a price of 100 and the AMM is going to sell some token which at this point it's a publicly known to be worth 100 for way less than 100. So that's why you see most of the prediction market will be stuff like elections because election you have a very cut-off date where you know when you know.

But if you are making a market for example, will the war in Ukraine stop? Well, you don't know when it stop or it doesn't stop. So for those markets it tend to be extremely hard to get liquidity. So what you can do, you can subsidize the liquidity knowing that the liquidity provider will lose money but then they should get more in the in the liquidity subsidies. Or we will need to have other form of market makers which do not allow you to just buy and sell at any time.

So, we are working also at with we see here on making some mix of AMM and auction so that you have some one or two hour to overbid other people who are interacting with the market maker specifically for market where we don't know when we know to make it way less risky for liquidity providers. So, this for now has not been implemented that just like a research direction but it's a huge problem for prediction market to provide liquidity the regulation loss. And so now on the weight of the candle the weight is 226 g. You can But you can take here if you want to if you don't trust the record here you can It's on the balance here if you want to check. So, this means that the up token are going to redeem for 100 and the down token redeem for zero.

Our market is done. Oh, the market about the weight is closed. It's closed also. Yeah, yeah. So, now both market are closed.

There is no open market left and you can redeem the up token on the price on the weight, sorry. Okay, so what do we what do we define here? We found a limitation of scalar markets. Please everyone silence everyone please. So, we found a limitation of scalar markets in that you have to specify ranges.

And if your outcome is outside of the range, just using the market price is not going to be very inform- informative. Uh we even saw that on most buds, the price of up was not even at 100. So, we see like here we have a huge miss in the prediction potential. Like if the market was close to 100, you would have gotten the information that the the weight is probably 100 or more. But here it was not even 100.

So, for scalar market to be good at giving you uh scalar outcomes, you need to have initial range which are good. And it's only an estimator of the value if this value falls within the range. You have to make the assumption that the value falls within the range. If there are some risk of the value falling outside of the range, you will end up uh with a biased estimate of this value. So, another limitation of uh of prediction markets.

So, now we're going to go to scalar market uh well, multi-scalar market. So, what can we do? We can estimate We can estimate values, but we can also estimate proportions. So, for example, we can make a multi-scalar market where we want to estimate how many seat in the Euro in the European Parliament with each party will get. So, here you don't take position on a particular value.

You take a position on a particular share. So, in the European Parliament, well, the amount of of seats is is fixed. But here we will see we will have a market where we don't even know uh the the range the potential range of the value. So, let's go to this market. You can open uh the next two boxes.

And here we're going to try to estimate how many participant do we have from each continent. So, open take the continent AMM in this room. Yeah. So, the you want to estimate the share of participant per continent in this room. In this room, yeah.

Yeah, I know at the morning they gave you the global amount. So, where you just were living before coming here. Oh, no, let's do do let's do where you're born. Like, where where are you from? Like, answer the question, it's subjective.

People may have different answer to that. The question is where what I'm going to ask is where are you from. You have to put one here also. You pay. OH, OKAY.

Asia is What? Uh I can give you some. You can You can pick up some here. Yeah. In this room, not the Vatican, in this room.

No. Yes, in this room. It's too easy. No. It's a war room, not just your body, it's a war room.

Yeah? Oh, no. I bet on Europe. You're in Europe and Asia. Yeah.

I give my answer to Asia. To Asia. I believe that there's more than 10% I want to say that And you don't know I don't know that. I don't know that. Yeah.

The way Do you have information I said no. So, if you believe that there's more than 10% You can you can buy anything. The same with the others. You can buy anything. At the percentage.

Not the amount, at the percentage. And you may not even know what is the total amount. So, here you are estimating a percentage. Both? Both.

Yeah. So, you're going to uh need to No, he's he's going to depend what people answer. So, if they consider themselves European or if they consider themselves Asian. Yeah. Okay, so the market are closing.

The market are closing and I'm going to ask you now. So, please everyone, the market are closing. Do your last trade and the market are closing. Okay, can can you close the market? Close the market.

Market are closed? Okay. Okay, so everyone please silence. Silence everyone, please. So, if you are from Europe, raise your hand.

If you are from Europe. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15. So, 15 Europe. Okay. If you are from Asia, raise your hand.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 18 19 20 So, 20 from Asia. Okay. If you are from North America, raise your hand. 1 2 3 4 5 Five from North America. If you are from South America, raise your hand.

1 2 3 4 5 6 7 8 9 9 Oh, and Europe, I forgot to put myself. So, that's 16. And if you are from Africa, raise your hand. 1 2 Two from Africa. And if you are from Oceania, raise your hand.

1 1 1 1 1. Okay, 1. So let's do the total. It's 53. Okay, so now you have the value that the token will redeem.

They redeem for the percentage, not the absolute value. They redeem for the percentage. And what's interesting is that we can show that you really were good at estimating that. Like I saw a bunch of pods where the price of Asia even went to the maxi- to the maximum amount of value in the AMM. So, you can see that it's a very good mechanism for doing estimation.

Of the future, well, here obviously I can't a week for a future event. So, I'm showing you with event happening in a couple of minutes. But, you can see that here on this particular room, the market were very efficient in estimating that. So, everyone, you can redeem the tokens. You You are redeeming?

Okay. Okay. You know, don't do the math. It's already written. So, you don't need to do the math.

I gave you the percentage under in the slide. Yes? Yeah? I I gave you the percentage. So, they each redeem for the percentage.

What? It's based on the percentage I gave you. 38. You get 38 for the agent token. For each of your token, you get 38 coins.

We have one last one after that. No, no, we have a bit more because they were already late before. I have the prompter. Okay, everyone redeemed? Everyone redeemed?

So, if you haven't redeemed any of your bond, raise your hand. If you haven't finished redeeming Oh, okay. Wait. You redeem? Everything redeemed?

Okay, so please everyone Everyone silence. Thank you. Please everyone silence. So, for now, we've been using markets to make prediction about the future. But the question is how can we use those prediction to make a better decision?

So, here in this example, you will have a market who will be the candidate of the Democratic Party. And you will get the token of this market. But then you can put this token into another market. Which will be which party will win the election. So, here you put some dye, you get some Biden token, you put the Biden token into another market, and now you get a token which will redeem for dye if Biden is a candidate and the Democratic Party wins the election.

The other token, they don't trade for dye, they trade for the underlying, so here Biden. So, here you have a Biden Democrat token that you trade with Biden token. And if this token is worth 30 Biden token, you have a conditional probability that if Biden is a candidate, the Democratic Party would have 30% chance of winning the election. So, you can change the market. And what can you do with that?

Well, we're going to start a We're going to start to show that. So, I need a volunteer, someone who is not vegan. A non-vegan volunteer, please. Non-vegan volunteer? Okay, you can come.

Uh okay. So, the volunteer will have the choice of either trying a cricket snack or some fried fish skin. And here we have two markets. So, one market on what will he choose, but after trying, he will give a uh a rating out of 10. And you have market on this rating.

So, that's going to be conditional market. You will have a conditional market on what will be the rating given if he picks the cricket, or what will be the rating given if he picks the fish skin. So, you can open the AMM with uh cricket or fish skin. And what is important is on the first two token, they are trading for coins. But then, the other token, they don't trade for coins.

They trade for the underlying token. So the first two tokens, they trade for coins. The four last token, they don't trade for coins. They trade for the underlying token, which is written on the on the sheet. And if you have any question, as usual, you can call me.

Uh you can participate in the market, yes. But please, don't tell everyone. And so keep in mind, you can always mint complete set. If you want, you may not want to trade in the market of what will be the snack chosen, but you may just want to trade on the conditional market on the rating conditional on a particular snack being chosen. Oh.

You mean it's okay, okay. If you have any question, raise your hand. Yeah? He has the token over there. Can you show the token?

Yeah. Yeah, you have peach skin, but you have the smaller one. Yeah, put the smaller one, yeah. The rating token for these I I got some for the plums and for the other things but not the rating though. Uh you don't have them here?

Can Can you check over there? I see them over there. And so here you have tokens of like 10, 50, and 300. So if you are buying you are buying two token of 50 for example. For now you don't need to use the 300.

Okay. But so for example here if you are paying you can get two token of 50. But because these tokens you're going to you can use it in those other markets. That's why we also give you token of 10 then. So here first you can get cricket and fish skin and you you can open the last box I think you will have in the last box.

Yeah. Oh because they gave us I had the prompter with the timer here. Oh 520. 520 was the base. Uh because like I I have here like it's giving like 17 minutes.

Because as the last team they finish a bit later so I we don't have the 10 minutes to set up the the space but it's going to be the last element. I do this last one and after I finish it. Yeah. All right that's it. Yeah.

And what would be the rating if this is the particular snack which is chosen? Oh, where was the guy who was chosen? No, he said he would come back. Yeah. Oh, yeah, he's back.

He's back. Yeah. That's up up. What? Take what?

No, but he he he said Oh. Yeah. Yeah. No, 100. Yeah.

No, two that's all. You will get 100 of each. So, that will be like a two of 50 or one of 50 and five of 10. Oh, yeah. I saw I saw the guy there.

Yeah. Yeah. Oh. No, no. The rating is out of 10.

Rating is out of 10, yeah. No, no. You You You put like one like that and five like that. Okay. Okay.

You You need You need to do 100 total. So, if you mint the complete set or if you buy it if you buy here, you will buy uh well You can for 100 for 100 you will get you will get that. And then if you want you can actually um take some position on those market while being neutral on those. You don't even need to make a like a bet on this. You can make the prediction only on the rating.

Yeah. Oh no no so you get 100 100 total. You have the 10 where are the 10? You have some token of 10. Token of these these token of 10.

No we have card of 10 also. I think there's some somewhere. Oh in the back pocket. Yeah here here here. I think there's some could be some 10 somewhere.

10? What fish, right? What fish can, yeah. I just gave you So here you have to buy with the underlying token. So here you have your fish skin you can buy fish skin up or fish skin down.

You can mint a set by giving this and you will get the set of fish up and down, yeah. Yeah. Yeah and you can mint a set of fish up and down if you wish. 100 100, yeah. Okay last trade.

Last trade. Where is our volunteer? Okay, here. So What we saw is that there are a lot of pods where both stay around 50, but yours also have some pods where the cricket stays at 50, but the fish the fish skin goes to 70. So, you can actually use this as a tool to help your decision on what do you want to to take because you can see that the because you can see that the market believe you will get the higher rating to the fish skin than to the cricket.

Because lot of pods they are 50/50 and you have some pods which are at 50/70. So, here you can use the market as a tool to make a decision. So, which snack are you going to choose? I will choose the fish. And I knew that from the beginning.

So, I I took rice on fish. Wow. So The fish is chosen and what's interesting here is because we had an actor which could influence the market. Well, this actor took the token of what he was going to do. Okay.

We let you finish it. So, what's your rating out of 10? Seven. So, the rating is seven. So, you have the fish skin token which redeemed and you also have the fish skin up redeeming for seven and the fish skin down redeeming for three.

Oh, no. All the market are closed. All the market are closed and the workshop is also closed. That was the last That was the last element. So, I'll let you redeem and so thanks everyone for for coming to this workshop.

I hope it allowed you to understand how prediction market works, how you can use those to predict the future, at least probabilistically, to evaluate potential future values, and also as a tool to aid decision as we saw with Fishkin and cricket market. So, thanks everyone for coming to the workshop. And if you could please help to put back the coin in the boxes, and the card if you also put them in the boxes, that would be great also. So, thanks everyone. And if you can help us for clean up, that would be great in order not to delay anything.

So, thanks everyone for coming. And I hope you I got you interested in prediction markets. Yeah. Where can I get a set of these to teach at the local high school?