@mikedemarais.eth
will prediction markets become part of more traditional investment portfolios?
it’s widely believed that if the CCP was to invade Taiwan that it would be an apocalyptic event in financial markets, but how would you even hedge against that outcome using traditional financial markets?
you’d have to create a complex rube goldberg machine of a basket of dozens of trades, you’d want to be long Volatility, short semiconductors, etc, all to still result in a fairly imprecise hedge of “profit if invasion happens”
but with prediction markets, you can skip all of the complex layered financial instruments and bet directly on the outcome itself
this seems like a dramatically more capital efficient and precise way of hedging tail risks in a portfolio
my guess is that prediction market liquidity and oracle reliability still need to mature before institutional capital would be able to utilize them as hedge, but it seems pretty clear to me this is the future