A prediction market is a platform where participants buy and sell contracts tied to the outcome of future events. The market price of each contract reflects the crowd's collective estimate of that outcome's probability.
On a prediction market, you might see a question like "Will the Fed cut rates before July?" with two possible outcomes: Yes and No. Each outcome is priced between $0 and $1. If the "Yes" contract trades at $0.72, the market is saying there is roughly a 72% probability of that outcome. If the event happens, "Yes" contracts pay out $1 each. If it does not, they are worth $0.
Participants profit by buying contracts they believe are underpriced and selling ones they believe are overpriced. This creates a financial incentive for informed trading, which is why prediction markets often outperform polls and pundit forecasts. The price aggregates information from thousands of people with real money at stake.
Polymarket is currently the largest decentralized prediction market, built on the Polygon blockchain. Users deposit stablecoins and trade directly. Other platforms include Kalshi (US-regulated), Metaculus (reputation-based), and PredictIt. Each has different rules around deposit limits, market types, and regulatory compliance.
Prediction markets offer a real-time, money-backed probability for events across politics, economics, technology, and culture. Traders use them as sentiment indicators, similar to the Fear and Greed Index but for specific events. They are particularly useful for assessing macro risks (rate decisions, elections, regulatory actions) that affect crypto and stock markets.
The Prediction Markets panel on the TerminalFeed dashboard displays live data from Polymarket via our API (/api/predictions). It shows trending markets, current odds, and trading volume. For a deeper exploration of how prediction markets work, read our Polymarket Odds Explained article.