Analysis of Mainstream Prediction Market Platforms: Polymarket, SX Bet, Pred X, and Azuro

Prediction markets use financial incentive mechanisms to forecast the outcomes of specific events. These markets allow the trading of bets on various events, and the market prices reflect the public's perception of the probability of the event occurring. Typical prediction market contracts trade between 0% and 100%, with the most common being binary options markets that settle at either 0% or 100%. Users can exit at market prices before the event occurs.

Prediction markets can extract the public's future expectations from the valuations of the betting community on event outcomes. Traders with different beliefs reflect their confidence through trading contracts, and the contract prices are seen as a summary of these beliefs.

Prediction markets have a long history, similar to the history of human gambling. Political predictions have existed for a long time, with bets placed on papal elections in the Middle Ages. Recently, with the US elections approaching, interest in betting on the political sector has risen, and the prediction market represented by a certain platform has attracted attention.

Polymarket: Order Book Tradable Prediction Market

Polymarket is a decentralized prediction market project that was born in 2020, allowing users to trade on popular topics. Unlike traditional sports betting, users can freely trade shares while the market is undecided.

Polymarket uses a conditional token framework based on a certain protocol. By staking $1 worth of collateral, two conditional tokens representing the positive and negative outcomes are generated. Users can trade them on the order book or wait for the event results to gain profits. The prices of the two tokens may not equal $1, and market makers need to participate to balance.

Polymarket mainly consists of market themes, oracle, conditional tokens, order book market, and liquidity providers. It uses a hybrid on-chain order book trading mechanism, with operators matching off-chain, and ultimately settling on-chain.

Currently, Polymarket does not have a token issuance plan, but it incentivizes market-making activities by distributing USDC through liquidity rewards to enhance the platform's liquidity depth.

SX Bet: Single Bet Prediction Market

SX Bet is a sports betting platform founded in 2019, primarily supporting betting on sports events, with recent additions for crypto and political topics. Unlike Polymarket, SX Bet only allows single bets, and wagers cannot be traded before the result is determined.

SX Bet has innovatively implemented a combination betting system, where users must predict multiple events correctly to win. This type of high-return betting resembles a lottery and is prone to viral spread. Prediction markets based on the "dual-token" framework find it difficult to implement combination betting.

Pred X: Prediction Market Based on AI-Driven Topic Suggestions

Pred X is a multi-chain prediction market that supports various topics such as politics and cryptocurrency prices. Its prediction topics are mainly generated and pushed by AI scraping the internet. Pred X is not a fully decentralized application; prices are determined by a centralized order book, and the ordering process follows smart contract rules.

Compared to other platforms, Pred X is still not mature enough. The order book depth and trading volume are low, and it does not support users placing orders themselves. There is also a lack of explanation regarding issues such as the consistency and liquidity guarantees of multi-chain support. Overall, this product currently resembles a semi-finished product.

Azuro: A Betting Protocol Supported by Liquidity Pools

Azuro is a foundational protocol for creating on-chain prediction markets, including smart contracts and web components. It only supports single bets and does not allow free trading of outcome tokens.

Azuro is centered around liquidity pools, with a single pool able to support multiple platforms and prediction topics. It introduces the concept of "liquidity trees," allowing different events and platforms to share liquidity. Odds are calculated based on the ratio of betting funds to total liquidity, with initial odds set by data providers.

Azuro supports multiple dapp implementations, allowing platform and liquidity pool creators to set dividends. A portion of the profits goes to Azuro DAO, and Azuro has also issued its native token $AZUR.

Prediction markets use free markets as an effective information-gathering system, often accurately reflecting reality. Cryptocurrencies reduce trading friction, and smart contracts and AMMs also bring better market mechanisms. However, various platforms still have different flaws, such as difficulty in achieving flexible betting or complex liquidity mechanisms.

The explosion of prediction markets reflects the popularity of crypto culture and the victory of free market culture, which is particularly important in the current environment where algorithms monopolize information. The free market remains the smartest and most effective information system.