[TL;DR]
- Traditional prediction markets have limited public participation due to complex entry barriers, centralized structures, lack of transparency, and regional restrictions.
- While blockchain and Web3 technologies can fundamentally solve these issues through decentralization, transparency, automation, and global liquidity, technical entry barriers still remain.
- WaaS (Wallet-as-a-Service) abstracts complex blockchain technology, allowing anyone to easily participate in prediction markets and enabling the construction of a truly collective intelligence-based prediction ecosystem.
1. Limitations and Problems of Traditional Prediction Markets
1.1. Accessibility Barriers: Complex Financial Products and High Entry Thresholds
One of the biggest problems with traditional prediction markets is that they are structured in a way that is difficult for the general public to access. These markets are primarily designed for financial experts or institutional investors, making it challenging for ordinary individuals unfamiliar with financial terminology and trading methods to participate.
To join a prediction market, users must understand complex contracts, grasp the characteristics of various financial products, and learn how to use professional trading platforms. Most existing platforms are built with professional traders in mind, offering non-intuitive and overly complicated interfaces for average users. This complexity goes beyond mere usability—it significantly increases the risk of losses due to erroneous trades.
A more serious issue is the high minimum investment amounts, which effectively exclude small investors from participating. Many platforms require minimum investments of tens of thousands of dollars, pushing out curious individuals or those with small but firm beliefs. This results in a limited diversity of perspectives, undermining the core value of prediction markets.
Furthermore, complicated tax reporting procedures and legal requirements have also acted as major barriers to public participation. Profits earned in prediction markets are subject to complex tax codes, and understanding or complying with these often requires expert knowledge or professional consulting. This burden has led many potential participants to opt out entirely.
1.2. The Pitfalls of Centralization: Platform Dependence and Risk of Censorship
Another major issue in traditional prediction markets is the structural limitation of relying on centralized platforms. These markets can only be accessed through platforms operated by specific companies or institutions, which poses several serious risks.
The greatest concern is that certain prediction topics can be excluded or censored at the discretion of the platform operators. Politically sensitive or socially controversial topics are often avoided entirely due to internal policies or external pressure. This fundamentally limits the role of prediction markets as free and open spaces for information exchange. Especially in areas such as political forecasts or economic policy outlooks—topics with important societal implications—this censorship greatly restricts the social utility of prediction markets.
There is also a constant risk of sudden service termination or policy changes by the platform. In the past, platforms have abruptly shut down or failed to adapt to new regulations, resulting in user funds being frozen or lost. These platform risks add an extra layer of concern for users, deterring many from participating.
The single point of failure risk inherent in centralized systems is also a serious problem. Server outages, hacking attacks, or natural disasters can paralyze the entire system, directly and immediately affecting users’ trades and assets. Worse still, users often have no viable alternatives during such outages. Because of the centralized nature of these systems, backups and failovers are limited, leaving users in a vulnerable position reliant solely on the platform's recovery efforts.
1.3. Lack of Transparency: Unclear Resolution Processes and Fee Structures
One of the biggest trust issues in traditional prediction markets is the lack of transparency. Users often distrust the platforms due to opaque result resolution processes and unclear fee structures.
In most platforms, outcomes are determined unilaterally by the operator or a designated institution, without transparent criteria. Subjective interpretations can influence decisions, especially in ambiguous situations or unforeseen developments. This lack of clarity frequently leads to disputes among participants.
The fee structure is also often highly non-transparent. Many platforms operate complex fee systems without clearly disclosing the breakdown, leaving users unsure about how much they are actually paying. From trading fees and withdrawal fees to platform usage charges, various fees are imposed without clear explanations.
Profit distribution also often lacks transparency. Participants rarely receive clear information about how rewards are calculated, how much the platform takes in fees, or how the remaining profits are distributed. This ongoing lack of transparency has fueled user dissatisfaction.
1.4. Geographic Restrictions and Liquidity Shortages
Traditional prediction markets also suffer from structural problems related to geographic limitations and liquidity shortages, which significantly hinder their efficiency and accuracy.
Regarding geographic restrictions, most platforms operate under the legal regulations of specific countries or regions, making global access difficult. Gambling laws and financial regulations in many countries either restrict or prohibit participation, preventing individuals with diverse insights from engaging in the global market.
In the case of political or international events, people in the affected regions often possess the most accurate intuition and information, yet are legally barred from participating. This limits the accuracy of predictions.
The liquidity problem is closely tied to geographic limitations. With fewer participants, liquidity is reduced, leading to distorted price discovery. In illiquid markets, even a few large trades can disproportionately affect prices, compromising market efficiency. It also makes it harder for participants to enter or exit positions, increasing risk and creating a cycle of avoidance that further reduces liquidity.
These problems are interconnected: low accessibility reduces participation, which decreases liquidity, which in turn further degrades market efficiency. Centralization and lack of transparency have only exacerbated these issues.
2. Prediction Markets Reimagined Through Blockchain and Web3
2.1. Decentralization: A Censorship-Resistant Global Prediction Platform
Decentralization—the core feature of blockchain—offers a fundamental solution to the centralization problem in traditional prediction markets. A decentralized prediction market operates independently, free from the control of any particular company or institution, creating an environment immune to censorship and arbitrary restrictions.
In traditional markets, platform operators decide which topics are allowed. In contrast, decentralized blockchain-based prediction markets remove such constraints. Even politically sensitive or controversial topics can be freely created and accessed without central authority, enabling the prediction market to function as a true arena of open information exchange.
Another key benefit of decentralization is the elimination of single points of failure. Unlike centralized systems that depend on a single server or entity, decentralized blockchain networks are supported by multiple nodes, ensuring more stable and continuous service. Even if some nodes fail, others can maintain the network, allowing uninterrupted participation.
From a global access perspective, decentralization brings transformative change. Traditional centralized platforms face legal restrictions in certain countries, but decentralized blockchain networks transcend borders, enabling equal access for anyone worldwide. This facilitates a truly global prediction market, combining perspectives from different regions to enhance predictive accuracy.
Moreover, decentralized governance allows community members to directly participate in decision-making about platform policies and updates. This significantly reduces the risks of unilateral policy changes or service shutdowns, providing users with greater stability and predictability.
2.2. Transparency: A Trustworthy System Where Every Process Is Public
The transparency of blockchain is a key element in resolving the trust issues that plagued traditional prediction markets. All transactions and data on the blockchain are recorded in a public ledger that anyone can verify, making every step of the prediction market fully transparent.
Transparency is most prominent in the outcome resolution process. Whereas traditional markets relied on operators or institutions making opaque decisions, blockchain-based systems define and implement resolution criteria in code. Smart contracts automatically determine outcomes based on pre-defined conditions, and the entire process is verifiable on-chain.
The transparency of data sources is another major improvement. In blockchain-based prediction markets, the origin, timing, and method of external data used for resolution are openly disclosed. The oracle networks that bring real-world data onto the blockchain are also verifiable, allowing participants to directly assess the reliability and accuracy of the data.
Fee structures also become far more transparent. All fee calculation logic is encoded in smart contracts, so participants know exactly when, why, and how much they will be charged. The purposes and ratios of fees—whether for platform operations, developer rewards, or liquidity provider incentives—are all publicly accessible, eliminating the fear of hidden or unexpected costs.
Complete transparency in transaction histories and fund flows is another significant advantage. Every bet and trade is permanently recorded on the blockchain and open for anyone to review. This eliminates the possibility of manipulation or fraud. Participants can monitor the market in real time and quickly detect suspicious or abnormal patterns.
Blockchain also offers a significant advantage in terms of auditability. All data is stored in an immutable format, allowing for accurate post-verification in the event of disputes or the need for validation. This enhances participant trust and reinforces the fairness of the prediction market.
2.3. Automation: Instant Settlement via Smart Contracts
Automation via smart contracts is a key driver of efficiency in blockchain-based prediction markets. Many processes that previously required human intervention can now be automated, enabling faster, more accurate, and fairer service.
The automation of outcome resolution and settlement is the most transformative improvement. In traditional systems, operators had to manually verify and settle outcomes after results were known. In contrast, smart contracts automatically resolve outcomes and distribute payouts once pre-set conditions are met. This drastically reduces settlement time and eliminates the possibility of human error or bias.
The automation of betting and trading also greatly enhances user experience. When a user joins a prediction, the smart contract automatically manages funds, executes appropriate trades, and distributes profits based on outcomes. Since this is done without intermediaries, the process is faster and more cost-efficient.
Automated liquidity management and price discovery significantly improve market efficiency. With automated market-making algorithms, appropriate levels of liquidity are maintained at all times, and prices adjust in real time based on supply and demand. This allows participants to open or close positions at their desired times, increasing overall efficiency.
Automated risk management systems are another important advancement. Smart contracts monitor and manage risks based on pre-defined parameters. If abnormal trading patterns or signs of market manipulation are detected, automated safeguards are activated to protect participants' assets.
Automated incentive distribution supports the healthy development of the ecosystem. Participants who make accurate predictions are automatically rewarded, and those who provide liquidity or contribute to market development receive incentives based on transparent criteria. This automated incentive system encourages broader engagement and drives growth in prediction markets.
2.4. Global Liquidity: A Massive Market Powered by Worldwide Participation
The global accessibility provided by blockchain and Web3 is a core factor in significantly improving liquidity in prediction markets. With regional restrictions removed, participants from around the world can gather in a single, massive market, greatly enhancing both efficiency and accuracy.
Cross-border participation exponentially expands the participant pool. Individuals previously excluded due to legal constraints in their countries can now freely join prediction markets via blockchain-based platforms. This allows locals with the most accurate insights into their region to contribute, greatly improving the quality of predictions.
A 24/7 global trading environment is created. Participants across various time zones can trade at any time, keeping the market continuously active and sufficiently liquid. This enables users to adjust positions at their convenience and dramatically boosts market efficiency.
Participation through various currencies and assets becomes possible. Blockchain-based systems allow users to engage with stablecoins or other cryptocurrencies, reducing the need for costly and complex currency exchanges. Moreover, participation is unaffected by monetary policies or exchange rate fluctuations, making the market more accessible to global users.
Cross-chain interoperability allows users from multiple blockchain networks to join a single prediction market. Users can participate using their preferred blockchain environments, broadening the base of contributors.
Increased global liquidity leads to better price discovery. As more participants trade based on diverse information and perspectives, market prices more accurately reflect real probabilities, significantly enhancing the core value of prediction markets—accurate forecasting.
Wider global participation also boosts resistance to market manipulation. With more independent users involved, it becomes harder for large capital holders to distort the market. Collective intelligence from diverse contributors helps form a more fair and efficient market, giving all participants equal opportunity and increasing the credibility of the market as a whole.
Ultimately, blockchain and Web3 provide a comprehensive solution to the structural problems of traditional prediction markets. Decentralization ensures censorship resistance, transparency builds trust, automation enhances efficiency, and global liquidity boosts market functionality. Together, these innovations create a completely new level of prediction markets, unlocking their full potential.
3. The Success of Polymarket and the Emerging Prediction Market Ecosystem
3.1. Analysis of Leading Platforms like Polymarket
Polymarket, a leading example of blockchain-based prediction markets, clearly demonstrates how the limitations of traditional prediction markets can be overcome. Launched in 2020 and built on the Ethereum blockchain, Polymarket provides a platform where users worldwide can predict and trade on various future events.
Polymarket’s most notable achievements were evident in the 2020 and 2024 U.S. presidential elections. Its predictions were significantly more accurate than traditional polls or conventional prediction markets, especially in forecasting outcomes in swing states. This served as solid proof of the power of collective intelligence drawn from a global user base. On election day, prices on the platform responded to live vote counts, providing faster and more insightful updates than the traditional vote-counting process.
From a technical standpoint, Polymarket is powered by USDC stablecoins, ensuring price stability. Each prediction market is structured as a binary event—outcomes are worth either $1 if correct or $0 if incorrect—meaning the price of a prediction reflects the probability of the event occurring. This intuitive design makes it easy for everyday users to understand and participate.
Beyond Polymarket, many blockchain-based prediction markets are developing with unique characteristics. Some aim for full decentralization, allowing users to create their own markets. These platforms often implement community-based dispute resolution systems to ensure objectivity in outcome judgment and use token-based governance systems for operational decisions.
Other platforms provide infrastructures using conditional token frameworks, enabling more complex prediction markets. These go beyond binary outcomes, supporting multi-outcome and conditional predictions, which enhances their utility as sophisticated risk management and hedging tools.
A shared strength across these platforms is their enhanced transparency and accessibility. All trades and resolution processes are recorded on the blockchain for public verification, and anyone with an internet connection can participate globally. Moreover, many operate with significantly lower fees than traditional platforms, making them more accessible to small-scale participants.
3.2. Diverse Use Cases for Prediction Markets
Blockchain-based prediction markets are expanding far beyond politics, creating value across various sectors and demonstrating new possibilities.
The most active use cases are in finance and economics. Markets exist for predicting central bank interest rate decisions, quarterly earnings of major companies, and cryptocurrency price movements, serving as alternative hedging tools to traditional financial products. Especially popular are markets forecasting decisions by the Federal Reserve or economic indicator releases, offering functions similar to derivatives markets but in a more accessible format.
Sports-related prediction markets are also gaining strong popularity. From global events like the World Cup and Olympics to local league games, a wide range of sports predictions is possible. These markets go beyond simply predicting match outcomes—they also include forecasts on individual player statistics, team season performances, and even business outcomes within the sports industry.
Prediction markets related to technological developments create particularly innovative value. Users can bet on the commercialization timeline of new technologies, success of product launches, and adoption of tech standards. These serve as trend indicators for industry professionals and directional tools for tech investors.
Markets focusing on social issues are also seeing notable growth. Long-term forecasts on climate change, demographic shifts, and the effectiveness of social policies are becoming increasingly valuable to policymakers and social scientists. For instance, predictions about the outcomes of specific environmental policies or the sustainability of welfare systems can serve as important references in decision-making processes.
Entertainment-related use cases are emerging as well. Box office performance of movies, music chart rankings, and awards show outcomes are all actively traded, offering both fan engagement and market analysis opportunities. Fans can interact in new ways, while the industry gains a tool for gauging public response in advance.
Prediction markets tied to weather and natural disasters show potential for integration with the insurance industry. Forecasts on rainfall levels, typhoon paths, and earthquake likelihoods can evolve into alternative forms of weather and disaster insurance.
3.3. New Value from Collective Intelligence and Broader Access to Information
One of the most significant values of blockchain-based prediction markets is their use of collective intelligence to expand access to high-quality information. Rather than relying solely on experts, these platforms gather a wide range of perspectives, resulting in more accurate and well-balanced forecasts.
The power of collective intelligence stems from diversity. Traditional predictions depended on experts or institutional analysis, but blockchain-based markets attract people from all over the world with different backgrounds. Their varied information, experiences, and perspectives are reflected in market prices, forming a comprehensive knowledge base that no single expert can match. This is particularly effective for complex and multi-dimensional social or economic phenomena.
Equal access to information is another important value. Forecasts that were once monopolized by specific institutions or expert groups are now publicly accessible. Since market prices directly represent the probability of events, this high-quality information is available to everyone in real time, helping to reduce information inequality and support better decision-making by more people.
Market-based information aggregation is far more efficient than surveys or expert panels. Participants have financial stakes in their predictions, which leads to more careful and accurate judgments than mere opinions. Market prices adjust immediately to new information, creating a dynamic, real-time forecasting system.
Incentive alignment also improves information quality. Since accurate predictions are rewarded financially, participants are highly motivated to seek and analyze the most accurate information. This naturally raises the quality of data and encourages more sophisticated forecasts.
There’s also a strong promotion of long-term thinking. Prediction market participants are encouraged to base decisions on data and logic rather than short-term emotions or biases. This improves the overall quality of public decision-making and enables more rational and forward-thinking policymaking.
Prediction markets also act as tools for surfacing hidden knowledge. Information held by specific individuals or groups—previously unknown to the public—emerges naturally through market participation. This enhances the social utility of information and supports better collective decision-making.
Ultimately, blockchain-based prediction markets are evolving into key social infrastructures that enhance information processing and decision-making across society. They serve as new tools for civic engagement and rational judgment, and are likely to play a major role in shaping the governance systems of future societies.
4. WaaS: The Core Infrastructure for the Mass Adoption of Prediction Markets
4.1. Persistent Technical Barriers
Even though blockchain and Web3 offer groundbreaking solutions to the structural issues of traditional prediction markets, significant technical barriers still remain for the average user. These barriers hinder the mass adoption of prediction markets and limit who can benefit from blockchain technology.
The most fundamental issue is the creation and management of crypto wallets. To participate in a prediction market, users must first create a digital wallet. During this process, they face unfamiliar technical concepts such as private keys, seed phrases, and public addresses. They must also learn how to securely store and manage this sensitive information. The fact that losing a private key or seed phrase results in permanent loss of access to funds is a major psychological burden for users.
The complexity of gas fees and network transaction costs is another major obstacle. On networks like Ethereum, users must pay gas fees to execute transactions, and these fees fluctuate in real time depending on network congestion. Users need to understand how to set appropriate gas fees—too low, and the transaction fails; too high, and they overpay. This creates confusion and stress for non-technical users.
Incompatibility among different tokens and networks also contributes to user difficulties. Each prediction market platform may run on a different blockchain and use different tokens. Users often need to convert their existing crypto into the required tokens for that specific platform. This process involves using bridges or decentralized exchanges, which can be complex and intimidating.
Interacting with smart contracts is another challenging aspect for general users. Many platforms require direct interaction with smart contracts, which means users must understand contract addresses, approve transactions, set slippage rates, and more. Mistakes during these steps can result in failed trades or unexpected outcomes, placing a significant learning burden on participants.
The need for security knowledge also acts as a major barrier. In the blockchain environment, users are solely responsible for protecting their assets. They must know how to identify phishing websites, choose secure wallet software, use hardware wallets, and even configure multi-signature setups. Without this knowledge, users are highly vulnerable to hacks and scams.
4.2. The Role of WaaS: Abstracting Technology and Enhancing User Experience
WaaS (Wallet-as-a-Service) plays a key role in removing these technical barriers and enabling everyday users to access the benefits of blockchain technology. By abstracting the technological complexity, WaaS provides user-friendly and intuitive interfaces while maintaining the underlying advantages of blockchain in the background.
The simplification of wallet management is the most important part of this abstraction. With WaaS, users no longer need to manage private keys or seed phrases directly. They can access services using familiar login methods such as email and password or social media accounts. Their wallets are professionally managed in secure server environments and protected by advanced security technologies. This gives users the convenience of Web2 services while preserving blockchain-level security and decentralization.
WaaS also addresses the complexity of gas fees and transaction costs. Users can focus on participating in prediction markets without worrying about calculating or configuring gas fees. WaaS providers can automatically determine the optimal fee settings and even pay the fees on behalf of the user, with simple later settlements. This greatly improves user experience and gives non-technical users the confidence to engage.
Token management and conversion are also automated through WaaS. Users can deposit fiat currencies like USD, and WaaS will automatically convert those into the necessary tokens for the platform. After participating in the prediction market, funds can be withdrawn in the user’s preferred form. This automation eliminates the need to navigate complex decentralized exchanges or bridging services.
Interactions with smart contracts are also significantly simplified. WaaS platforms convert complex smart contract interfaces into intuitive web or mobile app interfaces. Users can participate in prediction markets as easily as they would take an online survey, while the WaaS system handles all blockchain interactions behind the scenes.
Multi-chain support is another major value of WaaS in expanding accessibility. Users can access various prediction markets built on different blockchain networks through a single unified interface. There’s no need to worry about which blockchain a service is on—they can simply focus on the prediction topic of interest.
4.3. Easy Access and Secure Asset Management
WaaS offers a comprehensive solution that both drastically improves access to prediction markets and ensures secure asset management. This is a key factor in drawing in many users who were previously discouraged by the complexity of blockchain.
The streamlined onboarding process is one of the most prominent benefits of WaaS. Instead of going through a complicated wallet setup, users can simply create an account using an email address or phone number. One-click sign-up via Google, Facebook, or Apple is also available through social login options, offering the same level of convenience as conventional web services. KYC (Know Your Customer) procedures are also simplified, allowing users to begin using the service with minimal information.
Support for a wide variety of payment methods greatly enhances accessibility. Depending on the region’s regulations, WaaS can support credit cards, debit cards, bank transfers, and PayPal—enabling users to fund their accounts without needing to purchase crypto separately. Withdrawals are equally simple, with users able to receive earnings from prediction markets directly into their bank accounts.
User interface design plays a critical role in the overall experience. WaaS-based platforms hide blockchain jargon and technical complexity behind easy-to-understand language and visuals. Participating in predictions feels like filling out a simple survey, with real-time results and earnings displayed using intuitive charts and graphs.
In terms of asset security, WaaS delivers enterprise-grade protection that individual users would find difficult to achieve on their own. Features such as multi-signature wallets, hardware security modules (HSMs), and distributed key management systems safeguard users’ funds. Regular security audits and penetration tests ensure that security levels are continuously monitored and improved.
Compliance and regulatory adherence are also critical functions of WaaS. WaaS providers ensure that services comply with local financial and crypto-related laws, minimizing users’ legal risks. Anti-money laundering (AML) and counter-terrorism financing (CFT) measures are implemented to support a responsible ecosystem.
Ultimately, WaaS serves as a perfect bridge—preserving the innovative benefits of blockchain while minimizing the technical burden on users. By doing so, prediction markets move beyond the domain of tech experts and become accessible to the general public. More people can now contribute to collective intelligence, enabling more accurate and efficient forecasts of the future.
5. Future Outlook and Conclusion
WaaS is set to completely transform the paradigm of prediction markets. As technical barriers disappear, prediction markets will expand from being niche tools used by experts to becoming part of everyday life for the general public. Just as we check the weather on our smartphones, people will soon check the probability of future events—and participate in predictions as easily as leaving a comment on social media.
With economies of scale, the accuracy of predictions will improve exponentially. The collective intelligence of millions of participants will yield forecasts far more precise than those of any individual expert or institution. This will lead to a revolutionary improvement in the quality of decision-making across society. Governments will be able to assess policy effectiveness in advance, companies will be able to anticipate market reactions and devise better strategies, and individuals will be able to make more rational decisions based on accurate information.
Traditional tools such as market research, polling, and expert forecasts will gradually be replaced by blockchain-based prediction markets. These new systems will produce information that is not only more accurate but also more cost-effective, disrupting existing industries and fundamentally altering how information is produced and consumed.
The prediction market ecosystem enabled by WaaS will realize a new form of information democracy. Moving away from a structure where knowledge and insights are concentrated among a select few, the world will see the emergence of a fair marketplace where everyone can convert their unique insights into value. A farmer’s forecast on crop yield, a local resident’s political intuition, an industry worker’s take on tech trends—all of these perspectives will be recognized as legitimate sources of value.
In this transparent and fair environment, information manipulation and market distortion will become virtually impossible. Everyone will compete on equal footing, and only those with accurate predictions will be rewarded. This will dismantle the existing structure of information inequality and bring about a revolutionary shift toward true equality of opportunity in the information economy.
Prediction markets will also enhance society’s collective learning ability. As participants receive real-time feedback and improve their forecasting skills, overall future literacy and rational thinking across the population will improve. This will lead to better democracy, a more efficient market economy, and more rational governance.
These changes signify more than the emergence of a new service—they represent a fundamental transformation in how society produces and consumes information. WaaS acts as the catalyst that brings the revolutionary potential of blockchain into reality, not just for prediction markets but for the entire Web3 ecosystem. By turning complex technology into simple services, WaaS is the final piece of the puzzle needed to complete the blockchain revolution.
In the end, the future of prediction markets is not about technology—it is about people. If WaaS removes technical complexity and creates an environment where anyone can participate, the power of human collective intelligence will be stronger than ever before. This is the true value of the prediction market revolution that WaaS is poised to deliver—a new tool for humanity to build a better future.
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