In the spirit of radical transparency, I thought I’d share with you, our users, the reasoning behind the pivot in very frank and unvarnished language. — SG

1. Manifold isn’t working as a business.
   • We love play money, and love the platform we’ve built.
   • If we could keep running Manifold in its current form profitably, we would.
   • Neither current mana sales nor other simple platform changes (a subscription plan, selling skins/cosmetics, ads, hosting reality dating shows, etc) would suffice to make the platform profitable (or substantially grow DAUs). A more drastic change is needed.
2. Real money can save Manifold as a business and bring prediction markets to a much larger audience.
   • We’ve found a legal path to introducing real cash prizes (sweepstakes) that can be transformative to Manifold as a business and getting new audiences on board.
3. In order to have real cash prizes, we must take on mana as a liability.
   • The current mana supply, if cashed out at a redemption rate of M100 : $1, would be a liability of $1.2mm.
   • Manifold currently has around ~$1.5mm in the bank.
   • Supporting real cash payouts means taking the nominal mana liability very seriously, including having segregated accounts for cash that could be withdrawn, closely tracking the mana supply, etc.
     • This remains true even if we have good reason to believe that users’ monthly withdrawal rate will be limited (which we do).
4. Changing the mana purchase/redemption rate is the least bad option.
   • Our goals have always been:
     • First and foremost, to ensure that we honor all explicit promises we’ve made
     • To preserve users’ forecasting track records (including profit graphs, leaderboard positions)
     • To not mess with user balances or bets
     • To ensure that Manifold’s financial commitments are sustainable, and Manifold can continue to operate
     • To keep the nominal purchase/redemption rate of M100 : $1
   • The solution we’ve found that satisfies as many of these goals as possible is to change the mana purchase/redemption rate. This change:
     1. Allows us to make whole all users who are interested in donating to charity (above even our previous commitment to only $10k/mo in donations)
     2. Preserves track records (we will can multiply previous profits by 10x)
     3. Means we don’t have to mess with your balances, etc
     4. Unfortunately, requires us to change the mana redemption rate
   • Solutions we rejected:
     • FTX-style accounting
       • Where we promise you everything is fine, and it ends in disaster afterward, i.e. claim that the mana redemption rate is fine even if the liability is most of our current runway and obviously not sustainable.
       • A lot of the feedback we’ve received has been pushing hard in this direction, and it’s taken a lot of integrity to say no. (If you want to know how people like SBF are enabled, consider looking in a mirror.)
     • Massive haircuts on balances and positions
       • This would preserve the mana redemption rate but break our commitment to allow users to donate and require messing with their accounts
     • Raising money to cover mana supply
       • This is a good idea, and something we have attempted. The problem is that raising a lot of money takes time, and time is something startups can’t afford. Also, having a million dollar liability on the books is not exactly enticing for investors.
     • Leave mana as play-money only and create new currencies that support cash prizes
       • Supporting more currencies increases development complexity substantially and we are small team. Additionally, it doesn’t kick-start the new currencies with a rich set of active markets and traders. It adds complexity to the app so that it makes it harder to onboard new users. Startups live and die based on focus, so we need to go all in on this new path.
     • Doing nothing
       • Wouldn’t solve our business or growth problem.

FAQ

Q: Is the mana purchase/redemption rate change a devaluation?

A: No, it’s not. Firstly, no one is financially worse off as a result of this change. Users who were interested in mana as vehicle to donate to charity will be able to donate in full, over and above the Manifold’s promised $10k / month donation cap. Secondly, users who are not interested in donating to charity gain something new—the ability to earn real cash. Thirdly, everyone’s track record and profit graphs will be preserved at the new 10x rate.

Q: Isn’t Manifold screwing over its users?

A: No, it’s actually the other way around. Manifold has received ~$130k in total mana purchases to date but is on track to pay out >$500k in donations. Most of this is from a grant we received, but the point still remains that users are taking out far more than they’ve put in.

Q: Isn’t changing the the mana redemption rate bad vibes?

A: Yes, it’s absolutely bad vibes. But we would rather have bad vibes than break our explicit commitments to you or put us on a path where we wouldn’t have enough runway to keep working on Manifold in the future.

Q: Won’t Manifold just change the mana redemption rate again?

A: No, we promise not to; it wouldn’t make sense. This is a one-time change to enable real cash payouts. More importantly though, we’ve established a new equilibrium where anyone can verify at any time for themselves that it is not in our interest to devalue by looking at the outstanding mana supply which we track on our stats page. Incentives matter, and we’ve set up everything to be fully aligned with honoring all mana liabilities going forward. In the world where we didn’t do the mana rate change, there would always be a lingering cloud of uncertainty surrounding our mana obligations. No longer.