Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Prediction markets are losing their way, according to Ethereum co-founder Vitalik Buterin. The platforms initially conceived as arbiters of truth are on the fast lane to becoming "corposlop," Buterin said on Feb. 14 on X. Buterin previously defined corposlop as prioritizing profits over the wellbeing of consumers.
• The AI Marketing Platform Backed by Insiders from Google, Meta, and Amazon — Invest at $0.85/Share Buterin on Feb. 14 said prediction markets are increasingly pandering to dopamine plays such as short-term price speculation and sports betting to drive volume, rather than markets with "societal information value." "My guess is that teams feel motivated to capitulate to these things because they bring in large revenue during a bear market where people are desperate – an understandable motive, but one that leads to corposlop," he said. Buterin said prediction markets would have to build a brand and community around "dumb opinions" to attract more people to sustain this model. "This is the slide to corposlop," he said. Trending: Build your own AI-powered index in minutes — and earn an uncapped 1% match when you move your portfolio to Public. Learn how it works. So how do prediction markets endure and grow without becoming a machine that preys on desperate and naive traders? By becoming a tool for hedging that replaces fiat currency, Buterin said. "You have price indices on all major categories of goods and services that people buy (treating physical goods/services in different regions as different categories), and prediction markets on each category," he said. "Each user (individual or business) has a local LLM that understands that user’s expenses, and offers the user a personalized basket of prediction market shares, representing ‘N days of that user’s expected future expenses.'" Buterin said that for the idea to work, prediction markets have to use yield-bearing assets so that people are comfortable holding them. He listed Ethereum as an option. "If we can make it work, it’s much more sustainable than the status quo, because both sides of the equation are likely to be long-term happy with the product that they are buying, and very large volumes of sophisticated capital will be willing to participate," he said. See Also: You Saved for Retirement — But Do You Know What You'll Keep After Taxes? Prediction market leaders Polymarket and Kalshi are already attracting significant institutional interest as is.