📝 Vitalik Talks About the 'Key Defects' and Future Potential of Prediction Markets
Ethereum founder Vitalik recently pointed out that a significant shortcoming of mainstream prediction markets is that funds do not earn interest. This means that when users participate in the market, they must forgo about 4% risk-free annual returns in USD, thereby reducing the attractiveness of prediction markets for hedging purposes.
He believes that once prediction markets can be linked to interest mechanisms (for example, by combining stablecoin interest rates or on-chain yields), it will not only attract more liquidity, but trading volumes will significantly increase, and there may truly be a surge in hedging demand from both institutions and individuals.
This reveals a key issue:
🔹 The efficiency of prediction markets depends not only on prediction accuracy but also on capital efficiency.
🔹 When participation no longer means 'capital is idle', it can become a truly usable risk management tool within the financial system.
👀 In other words, prediction markets may be approaching a tipping point from being a 'niche speculative game' to becoming 'financial hedging infrastructure'.
