A veteran of prediction markets recounts a decade of evolution: from Augur's "Innovation Theater" to Polymarket's practical breakthroughs.

Augur was one of the earliest prediction markets in the crypto space in the last few cycles, and Joey was its co-founder. In that sense, he should be one of the people most acutely aware of the changes in the prediction market. Let's see how he views these changes:

In a recent interview, he shared his experiences of both success and failure in predicting the market:

He believes that Augur faced three major problems in its early stages: low liquidity, poor user experience, and regulatory uncertainty, which ultimately led to a mismatch between the product and the market. He also believes that while Augur demonstrated the potential of crypto-native innovation, it also exposed the gap between concept and practical application: the initial focus was on "innovation theater," but now the focus needs to be on real-world needs.

He believes the lessons to be learned are that prediction markets need to address the "oracle problem" (real-world data input) and user barriers, rather than relying solely on the concept of decentralization; in addition, founders should avoid "decentralization too early" and first build a centralized prototype testing market before going live on the blockchain.

Joey believes Polyamarket's current breakthrough is primarily due to its real-time event predictions (such as elections and sports) and highly liquid design, which have attracted non-crypto users. For example, its aggregated information is more accurate than traditional polls, and the surge in trading volume during the 2024 US election proved its value as an "information market."

When discussing whether prediction markets are merely gambling, his view is that they are no longer just niche gambling, but rather risk hedging tools. For example, businesses can use them for supply chain forecasting, transcending the stereotype of "just gambling."

This marks a shift in crypto from speculation to practical application. Similar to the stock market, prediction markets involve speculation, but their core is information discovery. Joey argues that if regulators view them as pure gambling, they will miss out on economic benefits.

In the future, the US may require prediction markets to comply with KYC/AML regulations, restricting anonymous transactions; the EU and Asian policies are more favorable, but the US dominates global standards. Regulation is a double-edged sword; on the one hand, clarity will attract institutions, but excessive regulation (such as banning certain types of event betting) will stifle innovation. He suggests that prediction market projects proactively cooperate with regulators to avoid an "adversarial mode."