Introducing Decentralized Prediction Markets on Solana

If you want to learn about decentralized prediction markets (DPMs), welcome! Let’s get started.

Hedgehog Markets
5 min readMar 31, 2021

Decentralized Prediction Markets (DPMs)

A prediction market — also known as an information market or decision market — is a platform where participants can predict the outcome of future events. Users of the platform can hedge or trade on a series of outcomes, from election results to sport events to auction sale prices.

DPMs use smart contracts that execute actions between buyers and sellers. This mechanism allows parties to transact directly with each other and removes the need for intermediaries. Following the conclusion of a market, these smart contracts interact with data services, or oracles, to authenticate the outcome and automatically distribute the results to users.

Prediction markets can also be a reliable forecasting tool. A market with high participation helps provide an indication of general sentiment about that market, thus more closely approximating the probability of a certain outcome. This information is made completely open to the public for anyone to use — maybe even to “predict the future.”

Benefits of DPMs

Removal of the intermediary

Unlike with centralized prediction markets, users of DPMs can transact without relinquishing custody of their funds. For example, when users take either a “Yes” or “No” position in a binary outcome market, they transact directly from their wallet into the DPM market pool. Also, all activity is transparent thanks to blockchain technology!

On-chain information

DPMs make all information available to the public; users have full access to the wisdom of the crowds, or the collective opinion from the group of market participants. With every transaction recorded on the ledger, users can access information from every position made on the blockchain, including its size, trade time, and transaction history.

Yield for traders and liquidity providers

Liquidity providers and traders have a symbiotic relationship that can generate a powerful feedback loop. Anyone can become an LP and contribute to a market’s liquidity; this benefits traders in buying and selling shares without slippage. Liquidity providers benefit from this trading activity by earning a passive yield based on trading volume, thus incentivizing more liquidity providers to join the pool, which results in more liquid and attractive markets for traders… and the feedback loop continues.

Introducing Hedgehog Markets

Hedgehog’s vision to offer the most user-centric prediction market platform permeates all aspects of our development. We chose to build Hedgehog on Solana because of its speed and low network fees. We believe that this provides a strong foundation for our entire user experience. The Hedgehog team is a collective of DeFi & DPM power users who obsess over experience and who also believe it’s time for prediction markets to shine — especially prediction markets with more liquidity, more intuitive UX, and more interesting and ubiquitous markets. We are also working on new primitives and market types that are made possible by the speed and low fees of Solana, and we can’t wait to tell you more.

Want to learn more?

Though decentralized apps are still in their early days, DPMs are a notable innovation that have the power not only to disrupt, but also to inform. If you have any questions, please join us for our AMA on 5PM UTC / 1PM ET / 10AM PST, Friday April 2nd hosted on the Official Solana Telegram channel!

Our next Medium article will cover our April Testnet Competition, guidelines, and prizes! Until then, please join our Discord community & follow us on Twitter to stay up to date!

For our extra spiky members — we are overjoyed by the excitement from the Solana community. We are seeking early supporters to help guide, grow, and evangelize our community. If this opportunity interests you, please fill out our Ambassador Program Form!

About Hedgehog Markets

The mission of Hedgehog Markets is to provide direct, veritable, and open access to the wisdom of crowds. Hedgehog Markets was founded by George Yu, a former Google and Oscar Health engineer. Interested in exploring ways to better predict future events, and noticing a lack of user-friendly ways to do so, building a decentralized prediction markets platform became a natural extension of that interest. Hedgehog Markets was built alongside e^{i} Ventures (EIV), a venture studio focused on DeFi and decentralized applications. Learn more about Hedgehog at and on Medium.

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