Introduction
As a market creator, you can create engaging questions to attract forecasters who will predict the outcomes of real-world events and provide insights into the future to any reader.
With the right approach, you can create exciting and informative markets that attract more participants and generate forecasting volume.
This guide presents practical tips and strategies to help you maximize the value of your prediction markets.
Rules of Thumb to Create Appealing Prediction Markets
- Formulate Clear and Pertinent Questions: The construction of a compelling question is the first step in crafting an effective prediction market. It should be simple, direct, and specific, leaving no room for ambiguity. It is equally important for the question to be relevant and of interest to your potential market participants. A question that reflects current events, popular trends, or significant future happenings is more likely to attract forecasters and stimulate their engagement.
- Select Appropriate Outcomes: Having a clear, specific, and pertinent set of outcomes is instrumental for the market's success. Shun outcomes that are hard to quantify, or even worse, impossible to confirm. By avoiding the creation of such markets, you prevent discouragement of participation and diminish the potential dilution of the market's appeal.
- Prioritize Accuracy and Transparency: For participants to make informed trades, they must trust the information provided about the event or outcome being traded. Offering detailed and current information about the event can help to boost trust and attract more participants. Polkamarkets Protocol employs an on-chain market curation mechanism to distinguish high-quality prediction markets from substandard ones. Users can cast their votes on the quality of the markets, providing their feedback on their relevance.
- Set Logical Expiration Dates: The market's expiration date is another critical factor. It should be set logically, ideally before the event's outcome becomes apparent or even before the event happens. A well-chosen expiration date keeps the market exciting and challenging and prevents the possibility of a premature conclusion that might discourage participation.
- Provide Enough Initial Liquidity: As a market creator, it is essential to seed your prediction market with enough liquidity to invite initial traders and create an active market. This initial liquidity acts as a catalyst for attracting other liquidity providers and encouraging trading activity. However, providing liquidity is not without risk. Understanding the concept of market liquidity, the associated risks, and the strategies to balance the risk/reward equation is critical.
- Aim for upvotes and verification: The Polkamarkets Protocol utilizes an on-chain market curation mechanism to differentiate superior prediction markets from inferior ones. Users can cast their vote on the quality of the markets providing their feedback on its relevance. By adhering to market curation guidelines, your market stands a better chance of gaining visibility and sparking interest. This can augment your market's appeal, as it is likely to receive more upvotes from users seeking stimulating and compelling trading opportunities. This increased user engagement leads to higher trading volumes and liquidity, promoting a lively and bustling market activity.
Make sure you read the article on how to create prediction markets on the Polkamarkets Protocol in detail.
Strategies to Optimize Trading Volume and Increase Earnings
Substantial trading volume is the lifeline of a successful prediction market. Markets that provide accurate and timely information about real-world events tend to attract active participants. An increase in active participation consequently leads to higher trading volume. Remember, a larger trading volume translates into more earnings from trading fees for you and the liquidity providers.
After ensuring your prediction market will be appealing on the dimensions outlined above, your work has just begun: now you need to attract forecasters to it.
- Promote Your Markets: Promotion plays a crucial role in increasing visibility and participation in your prediction market. By leveraging social media platforms to share updates and engage with potential participants, you not only create anticipation around the trading opportunities it offers but also improve its exposure. This enhanced visibility can draw more participants, leading to higher trading volumes, and consequently, increased trading fee earnings.
- Foster a Dedicated Community: Establishing a strong, engaged community around your prediction market can be instrumental in sustaining and growing trading volumes. You can achieve this, for example, by engaging with participants in the Polkamarkets Discord server. This nurtures a sense of belonging and ensures a continuous stream of active participants, further stimulating trading volumes.
By implementing these strategies, you'll not only create an engaging prediction market that consistently attracts participants but also ensures higher trading volumes, leading to increased earnings from trading fees.