Politics and Crypto: How Bread and Circuses Boost Blockchain Prediction Markets

“Two things only the people anxiously desire — bread and circuses… and a way to earn yields on staked tokens.”

– Unknown Roman yield farmer.

The initial launch of well-known cryptocurrencies like Bitcoin and Ethereum went relatively unnoticed by the world’s masses – few of whom could imagine a pressing need for what at the time looked like, at best, internet monopoly money.

That dynamic quickly changed, however, with the birth of blockchain-based prediction markets. Unlike the seemingly ethereal currencies mentioned above, prediction markets launched with a well-established, easily-understood use-case already intact. With an estimated half a trillion dollars being turned over by the global gambling industry on a yearly basis, even those uninitiated to the ways of cryptocurrency quickly grasped the simple concept at play when it came to prediction market apps.

Prediction Markets: A Real World Betting Window Into Crypto

One of the first such apps to enter popular mainstream consciousness was Augur (REP), which gained the attention of the masses soon after launch by integrating real-world affairs into its protocol. 

Within the first month of going live in 2018, the Augur prediction market took in over $1.5 million in staked bets – largely thanks to its ability to bridge the gap between the crypto nerds and the risk-taking politicos. 

Augur hit mainstream headlines almost immediately after it was discovered people were laying bets on the likelihood of polarizing U.S President Donald Trump being assassinated by the end of the year. (It didn’t happen.)

As the Trump presidency rumbled on, relatively unscathed, much of the attention that Augur gained after launch slowly trickled away. But now, with the U.S presidential elections just over a week away, the Augur app is once again host to a renewed flurry of activity. Over $8 million is staked on Augur at time of writing, with the overwhelming majority wagered on political outcomes – namely, the identity of the next U.S president.

Give Them Bread, Circuses… and Free Tokens

With political discourse coming to resemble the professional wrestling promos of yester-year, it should be no surprise that the promise of bread and circuses should continue to draw yet more users to blockchain prediction markets.

This time, however, things are a little bit different. The explosion of decentralized finance (defi) in the summer of 2020 introduced some brand new concepts to the world of cryptocurrency, and specifically, to prediction markets.

Yield farming (or liquidity mining) has emerged as a crucial tool in the DNA of automated market makers (AMMs), and its effects have been witnessed no clearer than in the autonomous, decentralized token swap application, Uniswap.

Now, the same incentive strategies are being applied to a new breed of on-chain prediction markets such as PlotX, dubbed the Uniswap of prediction markets. Unlike Augur, PlotX rewards its users with regular payouts of its native PLOT token relative to the number of predictions made, and the length of the prediction in question.

PlotX

Just over a month after the launch of its alpha product, PlotX has seen over 20 ETH staked on over 500 markets, with over 6 ETH having been paid back to its users in the form of the PLOT token.

For now, PlotX incorporates prediction markets based on the movement of Bitcoin and Ethereum coin prices. But as outcomes surrounding real-world events eventually make their way onto the PlotX orderbook, the old adage that the people desire only bread and circuses might need to be revised.

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