Co-founder $ETH Vitalik Buterin expressed concern about the current state of prediction markets. The growing reliance on uninformed speculators threatens the viability of the sector, he believes.
«Prediction markets seem to be increasingly descending into an unhealthy model: they are focusing on short-term bets on cryptocurrency prices, sports betting, and other things that provide only momentary dopamine, but offer neither long-term value nor benefit to society,» wrote the programmer.
Buterin divided market participants into 'smart traders' who profit from information and 'losers' who absorb losses. He mainly categorized retail investors as part of the second group.
Dependent on such platform dynamics risk creating communities where uninformed trading is encouraged.
"There is nothing fundamentally immoral about taking money from people with foolish opinions. But there is something fundamentally 'cursed' about relying too heavily on it," he noted.
AI personalization and the abandonment of stablecoins
To address the issue, Buterin proposed a new architecture: prediction markets should become a hedging tool tied to price indices of goods and services by region.
The concept assumes that users will run local language models. Neural networks will analyze individual consumer habits and form a portfolio of bets that compensates for the rising prices of essential goods.
The co-founder of Ethereum also admitted that such markets could be denominated in income-generating assets. This will create conditions for a complete abandonment of stablecoins tied to fiat currencies.
"We don't need fiat currencies at all! People can hold stocks, ETH, or anything else for wealth growth, and use personalized shares of prediction markets for stability," he stated.
Buterin's position resonates with his recent comments on DeFi's dependence on the dollar. The programmer believes that the industry should abandon fiat currency as a unit of account — 'stable coins' should be oriented towards generalized broad market indices.
Recall that at the end of December, the co-founder of Ethereum called prediction platforms a filter against fakes and panic in the news.
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