Hello, thank you all so much for coming. This Manifest festival is twice as big as last year. I hope it’s twice as exciting for you. Unfortunately, I doubt my talk will be twice as good as last year’s.
I’m James, one of the founders of Manifold. It’s nice to meet you if we haven’t already met.
I feel like so much has happened in the prediction market space in the last couple years. Recently, we’ve even had a few articles come out patiently explaining why prediction markets will not grow any more and are not that much better than polls. That’s how you know we’re on to something.
So let me tell you why I’m still jazzed about prediction markets, and the exciting applications I see for the future of prediction markets.
The original idea for Manifold was to have you run your own market: ask a question, set the resolution criteria, accept traders, charge fees, and judge the resolution. You offer a valuable service, and in exchange, you earn money from the trading fees.
For regulatory reasons, we chose to use play money, but I’m happy to say the dream of earning income by running a popular market is nearly here. We’re working out a few details with our lawyers, but cash prizes via the sweepstakes model will likely ship in the next month. (Yeah!)
If you want to know more about sweepstakes, we’ll have other sessions, including, unconventionally, a live theater act entitled, “Sweepstakes Mania”, to help explain, so look forward to that!
Yesterday, you might have heard, SpaceX completed a successful test flight for Starship and splashed down.
This is significant for many reasons, but there’s one more Manifold-related reason which you probably didn’t know. One of our users, chrisjbillington, created a market on whether Starship would survive reentry, subsidized it with 50,000 of his own mana, cleverly set it to close before the actual event happened so that the liquidity wouldn’t be eaten up by traders, and then, for the first time, came out with a net-profit as a creator. That’s awesome.
Never mind that his profit, according to his calculation, was the equivalent of $1.40 in mana.
But no, it’s important because it’s demonstrating, at a small scale, what will soon become possible at a much greater scale.
So this is the first thing I’m jazzed about for prediction markets. User created markets where the creator can make net-earnings with no outside subsidies. There’s nothing quite so unstoppable as engine where more value comes out than was put in. This is what we’re building for prediction markets.
As tools for managing liquidity develop, and as the world gets more used to relying on prediction markets, the unit economics will only get better. I think we will see markets proliferate into many domains: News and politics, but also science, technology, policy, and many other serious use cases.
But what about markets on niche topics where the stakes are not high enough to support profitable markets?
Well, you can subsidize markets. This changes the equation. Instead of profiting from trades, you are buying information as a service.
I paid 10,000 mana to set up a cool numeric distribution market on Manifold’s Daily Active Users for July. It shows we’re expected to grow, with a long right tail to grow a lot, and a peak around our current daily active users. We recently built out this tech to make betting on numeric distribution easy. You simply choose an interval and bet it up.
But there’s something magical about being able to add more subsidy to the market, and thus incentivize more people to spend more effort forecasting the distribution.
There are many examples where prediction markets are doing valuable research for us. We have markets on exactly what is going to happen with sweepstakes — whether we’ll still be operating cash prizes at the end of the year, whether there will be legal action from the CFTC. Very useful information!