Ethereum co-founder Vitalik Buterin suggests prediction markets should shift focus from “dopamine” crypto bets to hedging real-world economic risks. He argues this could create price stability tools that eliminate the need for traditional fiat currency. Industry figures like Myriad CEO Loxley Fernandes agree, stating hedging transforms markets into “information infrastructure.”
Ethereum co-founder Vitalik Buterin has stated prediction markets need a new direction. He expressed concern in a long tweet that they are over-converging to short-term cryptocurrency price bets and sports, which he described as having “dopamine value but not any kind of long-term fulfillment or societal information value.”
Buterin’s proposed solution is to prioritize hedging strategies. He provided the example of a biotech shareholder betting on a political outcome harmful to the company, thus mitigating potential losses.
This concept extends to potentially replacing fiat currency and stablecoins. Buterin argued that instead of creating a decentralized stablecoin, the goal should be to “get rid of the concept of currency altogether” by using prediction markets for goods and services.
The vision involves users holding personalized baskets of prediction market shares representing their future expenses. These shares would payout in preferred assets like Ethereum or wrapped stocks, not non-interest-bearing fiat. Buterin concluded this model would be sustainable as both market sides would be “long-term happy.”
Industry leaders acknowledge this perspective. Myriad CEO Loxley Fernandes stated, “Prediction markets shouldn’t exist to farm opinions or fulfill short-term dopamine needs.” He agreed the focus should be on hedging reality for risk reduction and economic stability.
Fernandes added that this shift would transform the sector, stating, “When prediction markets become tools for risk reduction, coordination, and economic stability, they stop being entertainment and start becoming information infrastructure.“
