@mrdavid
There are actually two types of prediction markets right now:
- Web2.5 - cryptocurrency is used as payment rails, but their counterparty is a team and the product does not interact directly with the onchain. Example: Stake/Rollbit.
- Web3 is characterized by some sort of onchain footprint, whether it's positions in the form of NFTs or stakes via smart contracts.
Two ways to match onchain bets:
- AMMs, which rely on passive LPs,
- order books, where the platform acts as an exchange.
Protocols can earn in the following ways:
1. trading commissions,
2. take a portion of the trader's winnings,
3. collect the counterparty's PnL.
Most protocols choose 1 and 3 points, but Polymarket does not take any commissions
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