It’s the month of December when pundits start making predictions for the coming year. It’s a tedious ritual.

As George Costanza famously said in an episode of “Seinfeld”,

Let’s look at the predictions of the prediction markets instead of interviewing “experts”, or worse, listening to me make armchair prognostications on what crypto will be like in 2024.

This article is part of CoinDesk’s “Crypto-2024” prediction package.

Participants in these markets may not be correct but they are willing to put their money where their words are. We can therefore be sure that they are saying what they truly think and not what they would like you to believe or what they feel you will want to hear. Even the questions that they ask may be telling.

What is a prediction market?

If you know the answer, please move on to the next section.

Participants in prediction markets bet on real-world events ranging from the serious war in the Middle East, to the fun love life of Taylor Swift. Participants can choose to buy “yes” or “no”. Those who correctly predicted the outcome of the trade will receive $1 for each contract they purchased, while those who made the wrong prediction will get nothing.

The market recently traded “yes” contracts for “Oppenheimer,” indicating that the market believes he has a 68% probability of winning.

These markets are more than just a game of speculation. They offer an alternative source for expert opinion and a counterweight to the fallible sources of traditional information. The prediction markets, for example, reportedly predicted the 2020 election better than polls. Cable news pundits are generally not punished for making mistakes. In prediction markets bettors can lose money if they are wrong. This gives them an incentive for expressing what they really believe.

They may have the wrong beliefs, but the financial risks should discourage those who are not well-informed. Conversely, the rewards for correctly betting should encourage traders with good insight, all things being equal.

Prediction markets are traditionally run by centralized websites, which settle bets using regular fiat currencies (PredictIt or Kalshi being the most well-known examples). Crypto traders are attracted to prediction markets, and in recent years a number platforms that operate on crypto rails have been developed.

Crypto allows traders to place bets on controversial issues without being influenced by a centralized entity. InTrade was a popular U.S. predictions market in the early 2000s that was shut down by Commodity Futures Trading Commission over a decade ago. This highlights the risks of centralized operators.

What I said earlier is now retracted. Here’s a traditional analyst’s prediction for 2024.

The team at Bitwise Asset Management wrote in their forecast that “more than $100 million would be staked on prediction markets. This will emerge as a ‘killer application’ for crypto.”

The Bitwise researchers continue: “Crypto brings prediction markets to a new level by removing borders and permissions, automating functions such as determining winners and loser and making payouts,” they say. These markets will be “a primary venue both for event-based wagering and traditional sports betting.”

Even if this is overly optimistic it’s still worth looking at what the prediction markets say about what could happen next year in crypto.

What crypto projects will airdrop in 2024?

Polymarket claims to be the world’s largest prediction market, and the only one that is crypto-based. ETH Price Index and Live Chart – CoinDesk”>(ETH), the second-largest cryptocurrency by market cap and the native token of Ethereum, the leading smart contract blockchain. (ETH deposits will be automatically converted into USDC.

It’s not surprising that, in addition to sports and pop culture, Polymarket also offers bets about cryptocurrency. BTC Price Index and Live Chart – CoinDesk”>(BTC) or ether will hit certain price levels. A few are concerned with what will happen in 2024.

airdrops are a common theme. They are crypto token giveaways for wallets that meet specific criteria. If they have used certain services before, then the odds are almost 50-50 that Aleo, a privacy-minded decentralized finance (DeFi) project will do an airdrop by April. According to Polymarket’s trading levels for Dec. 12, there is a 50-50 chance that Aleo will airdrop tokens before April. There’s also an 11% chance the Pudgy Penguins collection of non-fungible (NFT) tokens will do so before March. And a 62% probability that Blast will airdrop tokens by May, which was a layer two blockchain that launched on Ethereum in the last month.

The trading volume on these niche markets is small, ranging from thousands of dollars per market. Polymarket may not be allowed to service U.S. citizens under a settlement made with the CFTC. This could exclude a large number of traders in the largest economy. $10k worth of bets are placed on five different projects to do airdrops by March 1. However, when broken down, the total is thousands of dollars. Probabilities vary from 16% for kamino a DeFi protocol to 39% another, marginFi.

Airdrops are popular for a reason. After all, they are free money. Investors can make informed decisions when they know which protocols will airdrop money for participants within a specific timeframe and which won’t.

Kraken IPO? OpenSea token?

Polymarket also poses interesting questions, such as whether the Kraken exchange is going to go public in June (21% chance on Dec. 12) and whether OpenSea will be releasing its own token before May (13% chance). However, if the time frame is extended to “sometime after 2024”, the probability increases to 67%.

Polymarket has some spicy bets: Will a link connecting the blockchains fall prey to an exploit before a specific date (a question which, as of Dec. 12 attracted more than $100,000 worth of bets making it the third-largest crypto-related market in Polymarket) Will a certain central platform file for bankruptcy?

These comments reminded me at first of the insinuations that newspaper columnists make in about “blind items”, and internet trolls who “just ask questions.” The fact that traders are making doomer predictions and have money at stake gives them some value, even though the amount of money is small.

It is interesting (suspicious?) The same question about the bridge exploit appears on Zeitgeist – a prediction platform on the Polkadot Blockchain network. Zeitgeist hosts markets about the fallout of the FTX crash, including whether convicted scammer Sam Bankman-Fried gets up to 50 years in prison when he is sentenced in march (42% chance). The volume is even lower than Polymarket; it’s in the thousands. In October, Zeitgeist announced that it would use market benchmarks provided by CoinDesk Indices. This company is also the publisher of this website.

It’s too early to say that prediction markets are a replacement for other forecasting sources and experts. They are a valuable supplement to a balanced diet of information.

Benjamin Schiller is the editor.