NIP-99: Prediction markets (Draft) \ stacker news ~nostr

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NIP-99: Prediction markets (Draft)github.com/nostr-protocol/nips/pull/517

3456 sats \ 21 comments \ @ek 11 May 2023 nostr

21 sats \ 1 reply \ @pillar 12 May 2023

You've probably been thinking about this for a bit. Hence, I would be delighted to hear your thoughts on what kind of advanced use cases do you think this could unlock long term.

I mean: having fun betting on sports, politics and such comes as a first idea. But if we could replicate the information obtained in financial markets through publicly traded options and similar instruments with this NIP... what would be the consequences of the first system that does this in an open and fully observable way? (Specially in contrast to the current financial order books which are walled gardens)

0 sats \ 0 replies \ @ek OP 13 May 2023

Hey, thanks for your question and interest in my thoughts!

Actually, I haven't been thinking much more about this then just making it possible to bet on stuff in a open, decentralized (=censorship-resistant) way yet. Since my current proposal still requires trust, I was more focused on finding a way to minimize trust. Like using fedimint as a fallback for arbitration if there is a dispute in the outcome of an event (for example, not sure yet if this makes sense haha).

I also thought about this more in a way of "commoditization of betting infrastructure" but not more related to the current financial markets.

For example, with this NIP, we could make bets on anything and thus hold people more accountable for what they say or do, possibly even with complete strangers.

You think your friend is not going to make it in time? Let's put 100 Satoshi on the line (with Lightning, we could even bet extremely tiny amounts like milli or microsatoshis). Either they make it in time and you lose but you also like that they made it in time, or they don't make it in time and you win. Kind of like hedging.

Conditional prediction markets which aren't regulated to death (mentioned in the video a linked in another comment here) could also have a huge positive impact on society, I think. However, to be fair, prediction markets also can have negative impacts like becoming "assassination markets" (that's also mentioned in the linked video).

But what you said also sounds very interesting and promising! I never bought a stock or participated in tradfi but what I've heard it's not very open and accessible.

So thanks for the inspiration!

I will try to make prediction markets on nostr/lightning a real thing and then let's see.

10 sats \ 0 replies \ @Chep 12 May 2023

I glanced over the proposal and from what I saw this idea is badass. Love the idea of letting people use Nostr to make bets in a p2p fashion

10 sats \ 5 replies \ @nout 12 May 2023

Have you seen the bets on Formula 1 results we have been doing on Nostr? Would this be able to support that?

0 sats \ 4 replies \ @ek OP 12 May 2023

No I haven't but yes, sport bets (which team will win?) are classic examples of prediction markets.

Can you show me one such bet? I would be very interested to see how bets are currently handled in the wild!

0 sats \ 3 replies \ @nout 12 May 2023

For example nevent1qqsgy5zchw8gs0d7q74a55pdyshdd2ke2mdu6ztfprm9gj886a3hwhsppemhxue69uhkummn9ekx7mp0qgsgsea7mylgnjfapk9vnzeyg0z423ueaku3jq6xj3439cplzdnyg5qrqsqqqqqpgqu2es

Or nevent1qqsp2ej59e3g8z7gmqw5csravqdm8ccwzlg69rp4m4rxz5ajwf9xnfqppemhxue69uhkummn9ekx7mp0qgsxde4g4chwd4sqgtd3pjycwhcdgchn8ynjt4f8evkchpwk7mjedgcrqsqqqqqp5r0tz0

0 sats \ 2 replies \ @ek OP 12 May 2023

lol, probs to these dudes to do this all manually

Yes, bets like these will be possible in a more standardized, automatic fashion with my NIP.

With proper software support (= NIP-99 clients), any user should be able to create such events and let people bet on stuff.

10 sats \ 1 reply \ @nout 13 May 2023

Can it do the specific setup like this though? Bet first 5 positions and get points for any correct position?

77 sats \ 0 replies \ @ek OP 13 May 2023

Yes, I think so. The simplest way would probably just be to create 5 bets and just say "Who do you think will be in top 5?

If your candidate is in the top 5 you win.

You can do this 5 times with different candidates and then this should be the same setup, no?

Or a more complicated way which is more a mirror of the current setup would be create an event with an outcome for every combination of candidates as part of the top 5.

This would just be a single bet where you pick your 5 candidates.

Edit: Oh, I think I misunderstood. The bet is not about who is in the top 5 but the actual positions in the top 5. But yes, that is also possible.

Then you just create 5 bets for every position and pick your candidate.

10 sats \ 3 replies \ @k00b 11 May 2023

Can you ELI5 it for us?

1481 sats \ 2 replies \ @ek OP 11 May 2023

Maybe @tldr can, haha

However, if you have 13 minutes, you can watch this video, it's really good: https://www.youtube.com/watch?v=xA27x7GRMZQ

Essentially, I want to see something like Augur (which is built on Ethereum) on nostr with lightning.

Then we can use the "wisdom of the crowd" to see what the free market thinks about upcoming events. Will Twitter go bankrupt in 2023? Will the Ukraine war end 2023? Does my professor know about LNURL-auth?

You can ask the market basically anything which has a definite outcome at some point in the future and people will put money to win while you get insights what people really think. At least in theory.

The video also mentions some drawbacks of prediction markets

171 sats \ 1 reply \ @tldr_dead 12 May 2023

what do you use as an oracle?

0 sats \ 0 replies \ @ek OP 12 May 2023

With oracle you mean who decides on the outcome of the event?

In that case, none. It's based on trust. I haven't found a way to make it trustless (yet?)

0 sats \ 1 reply \ @aljaz 15 May 2023

not to be a downer there but arent dlc's significantly more suitable for prediction markets than nostr due to oracle?

0 sats \ 0 replies \ @ek OP 10 Jun 2023

yes but afaik, there is nothing like DLCs on lightning (?)

0 sats \ 3 replies \ @scottathan 13 May 2023

Hot take: we need a more general kind that people can build this stuff on, instead of doing a NIP for each one.

0 sats \ 2 replies \ @ek OP 10 Jun 2023

Why? What's the problem with a NIP for everything? If there is just a general NIP for a lot of stuff, how can you say which piece of that NIP you actually support?

10 sats \ 1 reply \ @scottathan 10 Jun 2023

Fair enough. My concern would just be a super bloated spec. Think to what happened with HTTP. At one point, the number of possible codes began to balloon, as people kept trying to use the protocol for nicher and nicher stuff. Eventually, they had to essentially ossify the protocol and let people build applications on top without changing the spec.

I do see where you are coming from though. Perhaps it will play out differently for nostr, espeocally because of how much people can adapt it.

0 sats \ 0 replies \ @ek OP 10 Jun 2023

Now I also see where you are coming from :) Makes sense.

0 sats \ 1 reply \ @tldr_dead 11 May 2023

The author of a potential new Improvement Proposal for the Bitcoin Lightning Network, an off-chain layer-two scaling solution for Bitcoin, has drafted a new proposal to add prediction markets to the technology. Known as NIP-99, if approved this network upgrade proposal will add a predictable event, which can have multiple outcomes, tracked by users. The outcomes can then be wagered on using bitcoin. This would create a prediction market where users can bet on the outcome of any given event. The proposal has not yet been implemented, but is currently being considered by the community and awaits approval.

0 sats \ 0 replies \ @ek OP 12 May 2023

@ass, wrong summary. NIPs are about nostr, not lightning.