Futarchy ethereum secrets
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Prediction markets would influence the processes they're supposed to be impartially observing. When there's a lot of money riding on something happening, it tends to happen. Sports and traditional financial markets have been dealing with this problem since forever. From the transcript: Richard: They say Bin Laden is just going to put all his money in the market and then attack?
Robin: Well, that was crazy because these were relativity thin markets, and they have a lot of money at stake. There are people willing to manipulate markets, but that actually makes the prices more accurate.
These markets are robust to attempts to manipulate. In fact people who want to manipulate them make the prices more accurate. RandomLensman 4 months ago root parent next [—]. Oddly enough, in financial markets people do not rely on self-correction for manipulation, but rather there is a tendency for it to be illegal. Market manipulation is in general not believed to make markets more accurate.
What if some other informed party made that bet? In small, open, and rather serene settings that might work out, but in a real market with fast movements, market makers, etc.? That's actually a slightly different thing. The quote from the transcript is talking about attempts to manipulate the market. Analogy: working extra hard to make your company succeed because it'll increase the value of your company stock. I think the idea is that these prediction markets are set up in a way so that the outcomes are generally deemed desirable increase GDP for example and it's OK to manipulate reality do work to achieve them while making money.
Government body says "We are considering adding full Github-flavored markdown support to Hacker News. People place their bets, either in the "Yes please" pool, or the "No to markdown" pool. Betting period ends. Government decides to add markdown. People in the "No to markdown" pool get their money back. If GDP does in fact go up over that 1 year, people in the "Yes please" pool make money.
If not, they lose their bets. There isn't a mechanism to make money by sabotaging GDP. Who do they lose their bets to? If the answer is the money is just set on fire or some equivalent which I think is actually a mechanism we should use more of when it comes to things like fines , where does the money come from if they win? That article doesn't deal with the issue of directly manipulating the thing measured by the success metric and implicitly assumes that it is unmanipulatable.
To take the example given in the article for bailing out banks and GDP, as soon as the "yes" trades are reverted and the "no" trades are confirmed, we collapse exactly into the scenario many other commentators on this thread have talked about.
Now, all holders of negative amounts of "no" tokens are incentivized to decrease GDP in 10 years because this increases their profits at the expense of holders of positive amounts of "no" tokens. The argument is presumably that there is an equal incentive on the other side to increase GDP, but that's a fragile assumption since in the real world betting market we still see fraud in the direction of those with power, even though in theory you could have fraud "pulling in both directions" and still leaves open the more general fragility-of-value problem as the article refers to it later on , namely that someone can manipulate GDP but doesn't expose this when betting occurs which again happens in real-world betting markets , which I'll talk about in a bit.
That's however irrelevant for the larger point. The problem we're talking about is basically the same one as a problem the article itself points out later. Of course, in reality, futarchies would patch the value function and make a new bill to reverse the original bill before implementing any such obvious egregious cases, but if such reversions become too commonplace then the futarchy essentially degrades into being a traditional democracy.
But the half-solution that the article hand-waves, namely "futarchies would patch the value function and make a new bill to reverse the original bill before implementing any such obvious egregious cases" is doing a lot of work here and should be viewed with a great deal of suspicion. It's not as relevant for the article, which explicitly points out it's not advocating for futarchy as government or at least not for all governance rather than e.
In a way, truly solving the fragility-of-value problem is basically solving the same problem as AI existential risk and I would assume most people in the futarchy community agree that the latter problem is a very difficult problem.
A failure mode of futarchy can then be thought of as a "monetary AI" completely optimizing for the wrong thing in spirit, even if it's the right thing in letter, e. How do the No people win in this scenario? What happens if Markdown is added and GDP goes down? How do you resolve that markdown actually caused the change in GDP? Aren't you just asking people to conditionally bet on GDP going up? Who are people betting against if No loses? Who's money do they get? Wait, that can't work; it's comparing against a counterfactual.
Let's say Hacker News gets markdown. We do not, but that's not the purpose of a prediction market. The purpose of the market is not to prove that the change caused the result, but to choose the best path forward in a world of uncertainty. You don't have to have a perfect crystal ball to make useful predictions about the future. Yes, sometimes a black swan event will cause a "good" prediction to not pan out, but on average if you can make better-than-chance predictions about the future and policies based on those predictions will personally gain predictors value, then people are incentivized to make good predictions on average.
Just like someone who can count cards won't win every blackjack hand, if they play for long enough, they are a favorite. Sure, but the point is that with futarchy as proposed you don't actually have a prediction market on whether the policy is good, you have the government looking at the delta between markets for and against a policy, and the one for the policy which isn't enacted gets voided so anyone manipulating its price loses nothing.
Big Markdown shorts the "No Markdown" policy, it doesn't get implemented and they get their short positions back again. There's really no prediction market incentive to bet against them: so long as they keep pumping money in to move the rate, none of your bets on the correct rate of GDP without Markdown will ever get paid out on.
They only need to bid it one basis point below the price of the With Markdown GDP futures contract to get their policy, so even if you have deep enough pockets to outbid them and good reason to believe Markdown has no effect on GDP, you'd be risking a lot GDP is pretty volatile and expert forecasts are regularly more than a basis point out in either direction to win very little if they didn't get their way.
Maybe I don't understand the bets because they weren't clearly spelled out. But there are four possible future outcomes to consider: 1. Let's structure this as a bet.
I don't like markdown so I consider taking the opposing side. Then in that case I'm mostly betting on whether or not I think markdown is going to get implemented , not whether I think it's going to be beneficial. And if the implementation decision is going to be based on which side bets more money, then that's mostly a popularity contest.
I just want to bet alongside whichever side is winning if I think the GDP is going to go up anyway for other reasons. I think that your example largely shows that it's not useful to make prediction markets about GDP for policies that have effectively no impact on GDP. If HN wanted to run a prediction market for features, they should use a measure like user growth, or average score of posts that use the feature or something. Something directly related to the feature in question. But presumably there are policies that have an impact on GDP, right?
A prediction market there is going to function properly. If you want to know what tax rate or pandemic policy the government should implement, it will absolutely have an impact on GDP. FiggyPudding 4 months ago root parent next [—]. Wouldn't this also open up to foreign influence dumping money and misinformation to promote negative policy decisions.
Or not even foreign influence. Instead of spending millions to influence voters, you spend millions on positions, and you get your money back if you don't win your side? Yes, plausibly. Maybe you could limit this by requiring bets to be made by individual citizens in the case of government policy markets or by shareholders in the case of a corporate market or something.
There are still avenues for corruption, but it's not clear to me that they are worse than the present state.
There is of course always the chance that those attempting to manipulate the market will lose their shirts. X does not need to be zero. Doesn't that still incentivize counterparties to do whatever they can to undermine GDP growth? He has written a new book about HFT which covers some of the same ground. That's where Hanson's idea of futarchy as opposed to prediction markets comes into play. I don't see how this helps any with the underlying problem.
All it does is introduce an additional incentive for another party to manipulate the outcome in order to win money by betting: whoever runs the security guards. In this scenario, the person running the security guards is the one organizing the market. Which just means the person organizing the market now has an incentive to manipulate it.
Doesn't seem like a good idea. So the potential streaker has one extra step, discovering the amount of guards, before placing the bet? How does this solve the problem instead of creating even more of a plutocracy?
Gaming the system will always be possible, except for a smaller amount of people. The market is closed before the number of guards is decided. Indeed the whole point of the market is to decide the number of guards. The potential streaker would have to bet in both markets, so won't affect the difference in prices between the markets.
Imnimo 4 months ago root parent next [—]. Well, but the reason we want to decide the number of guards in the first place is that we want to prevent a streaker. If, in order to decide the number of guards, we use a process that increases the odds of a streaker, isn't that counterproductive? This is why, for example, decentralized life insurance policies have been compared to hit contracts.
Changing behaviors is a feature not a bug. Your health insurance writer who's bought "No optimalsolver will not get sick" loses money if you do in fact get sick. Your fire insurance writer has an incentive to provide you free fire inspections because it reduces their payouts.
A farmer plants a lucrative but fragile crop because a meteorologist can better price weather risks than they can.
Conditional Tokens - Road to Futarchy
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Ethereum Whitepaper - Annotated
Sign in. Pro Content. Insights Content. By Jose Maria Macedo. In Part 1 of this series , we discussed how all important challenges facing humanity can be broken down to coordination problems. We explored what this issue entails, why it emerges and how it affects both society on a macro scale as well as how it manifests in the crypto industry specifically. In this piece, we will discuss solutions to this problem. We will begin by providing brief context on the problem as well as on existing solutions and why they fail.
Robin Hanson: Futarchy – Prediction Markets and the Challenge of Disruptive Technology
Notably, they all did so within three months of each other. At least by this one admittedly imperfect metric, Bitcoin is losing its lead. Bitcoin losing its lead makes sense to me. In terms of actual utility, Bitcoin is inferior in almost every way to several other cryptocurrencies, most dramatically Ethereum. One question this model addresses is whether you can simply clone a cryptocurrency and expect it to have much value.
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Tellor, a member of technology-focused incubator and accelerator Frederick Innovative Technology Center, Inc. DeFi hosts transactions on a blockchain acting as a public ledger that stores information about transactions including the date, time, and amount transferred. This shows who participates in transactions allowing anyone to see what has taken place on the blockchain— creating a transparent and censorship-resistant financial system. Smart contracts can be written on top of blockchains that allow reliable financial transactions i. Tellor has pointed out that while DeFi is censorship resistant, blockchains are disconnected from the real world.
Satoshi Nakamoto's development of Bitcoin in has often been hailed as a radical development in money and currency, being the first example of a digital asset which simultaneously has no backing or intrinsic value and no centralized issuer or controller. However, another - arguably more important - part of the Bitcoin experiment is the underlying blockchain technology as a tool of distributed consensus, and attention is rapidly starting to shift to this other aspect of Bitcoin. Commonly cited alternative applications of blockchain technology include using on-blockchain digital assets to represent custom currencies and financial instruments colored coins , the ownership of an underlying physical device smart property , non-fungible assets such as domain names Namecoin , as well as more complex applications involving having digital assets being directly controlled by a piece of code implementing arbitrary rules smart contracts or even blockchain-based decentralized autonomous organizations DAOs. What Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create "contracts" that can be used to encode arbitrary state transition functions, allowing users to create any of the systems described above, as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code. The concept of decentralized digital currency, as well as alternative applications like property registries, has been around for decades. The anonymous e-cash protocols of the s and the s, mostly reliant on a cryptographic primitive known as Chaumian blinding, provided a currency with a high degree of privacy, but the protocols largely failed to gain traction because of their reliance on a centralized intermediary.
Each month, we shine a spotlight on the 10 ERC projects with the highest-recorded developer activity for the past 30 days, as calculated by Santiment. Development Activity is an often-underrated indicator of project success, as it demonstrates the month-to-month commitment to creating a working product, continuously polishing and upgrading its features, and staying true to the long-term roadmap. GnosisDAO is the prediction market-driven collective, stewarding the Gnosis ecosystem through futarchy: governance by prediction markets.
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