Are prediction markets losing their original purpose? Ethereum [ETH] co-founder Vitalik Buterin worries that they’re becoming more about making quick money than being useful.
Here’s why.
The issue at hand
Source: X
In a recent post on X, Buterin acknowledged that prediction markets can be useful, especially as tools that help people understand events and manage risk.
However, he warned that many are now dominated by short-term bets on crypto prices, sports, and other events that attract attention but offer little lasting value.
There’s a deeper issue as well. According to Buterin, many prediction markets rely on inexperienced traders who often lose money, which may be unhealthy for the ecosystem.
A better use would be helping investors hedge real risks.
So what’s the solution, really?
Buterin says combining on-chain prediction markets with AI tools (such as LLMs) will help people manage everyday expenses and protect themselves from rising costs.
In this model, prediction markets would track the prices of essential goods and services across different regions.
AI tools would then analyze a person’s spending habits and recommend personalized positions tied to their future expenses.
The idea is that if the cost of living rises, gains from these prediction market positions could help offset those increases. This could give individuals and businesses a way to protect their purchasing power.
Not everyone’s happy
As expected, Buterin’s post saw strong reactions on X, with many users defending the buzz as a necessary entry point. One user wrote,
Source: X
Others argued that the hype creates the liquidity needed for real hedging to exist. Some even addressed practical challenges, stating,
If speculation is limited, there is the risk that users might leave for other platforms where they feel more accepted.
Final Summary
- Vitalik Buterin wants prediction markets to protect people from inflation and rising living costs.
- However, there is the risk of limited speculation slowing growth.
Source: https://ambcrypto.com/vitalik-buterin-wants-to-build-the-next-generation-of-finance-heres-how/
