Hedgehog Polls: Prediction Markets Simplified
Tackling prediction markets in an attention based economy
So what is Hedgehog Polls?
TLDR: With Hedgehog Polls we want to gamify prediction markets in order to incentivize both responses and creations of markets while keeping it free for all to participate. This removes the typical barriers to entry of liquidity, capital risk and regulation.
Example please…
Think Twitter polls, asking friends questions or having those random discussions that come up at the Thanksgiving table — we want all of those to be asked and answered with our app, risk-free, so we can anonymously harness and track market sentiment on anything. The best part is, by answering and creating polls, you can accumulate points which can be used in auctions and raffles for digital collectibles (or NFTs), as well as, get the chance to receive airdrops for being on the leaderboard, creating an interesting market or anything we think is deserving of a little something extra!
What’s the catch?
There really isn’t one! With Hedgehog Polls, we’ll use the power of crowdsourcing and then repackage the cumulative responses (aka data) as meaningful insights to see how market sentiment shifts over time on political front runners, accuracy predicting sport outcomes or where users prefer to shop for their groceries. By running promoted polls (ads) or selling packaged data gathered from responses over time, we can pass on some of that to the users as rewards. We want to tackle prediction markets one poll at a time and allow our users to benefit from their time and responses! 🤝
Ok sounds cool, but where did this idea come from?
We’ve always had a passion for prediction markets and data analytics, but struggled to see a great solution to address the typical barriers to entry — most notably liquidity and regulatory risks. We also have seen the benefits of blockchain technology, which can enable us to drop prizes to users and let them ‘own’ their rewards. Last but not least we needed to address short attention spans — thanks TikTok. Prediction Markets typically are singluar markets that are traded over an extended time frame until the point of resolution. This allows the price, or odds, of the market to change over time. We realized this requires users to come back and trade their positions, risk capital and adjust their conviction over what could be months or years and wasn’t very realistic.
This is how Hedgehog Polls came to be and why we think that having short time frame polls that can be repeated over any period of time can still provide meaningful insights about various topics. For example, you could ask others once a week what grocery store they’re shopping at to see if more users are shopping at Whole Foods or a Walmart SuperCenter. One could then chart these responses over a multi-month timeframe to extrapolate spending habits. Hedgehog wants to get more people involved with and drive conversations around as many topics and markets as possible!
You can check out our gitbook now for more information on how to use the app and follow us on Twitter for updates on our app release!
Let’s end with some context - What are Prediction Markets?
Prediction markets are markets that enable participants to trade or bet on the outcomes of future events. Markets are tied to events and have market topics such as Will candidate X win the 2020 presidential election? Participants can purchase shares tied to outcomes, where market prices are dictated by the wisdom of crowds and resolution prices are determined by the actual outcome of the underlying event. Up until the final outcome, share prices reflect the collective knowledge of market participants and the market consensus on the probability of each outcome occurring. Market topics can cover any event where results can be objectively verified, e.g., elections, sporting events, crypto prices, etc.
The crux of Prediction Markets
There are a few problems that we constantly see when trying to launch real money prediction markets - namely liquidity and regulation.
Liquidity - with markets like Augur, Polymarket and Hedgehog Markets you see decentralized markets build on-top of blockchains. The goal is to allow anyone to participate in these markets but the lack of liquidity doesn’t allow any large individuals or institutions to actually place bets with size without drastically moving market prices and therefore odds. Also, due to the vast nature of possible markets but small pool of participants that want to risk actual funds, there isn’t a lot of incentive for liquidity providers to earn fees off of small trading volume which leaves a chicken or the egg-like problem for decentralized prediction markets.
Regulation - this is another problem that is hindering the explosion of prediction markets. Without proper regulation prediction markets will lack large institutional money (needed liquidity and volume) and will operate in a ‘gray’ area of rules and regulations across the globe. We’ve seen sites like PredictIt and Polymarket get hit with fines and/or legal actions against operations in the United States.