Exploring Nezha’s Revolutionary Positive-Sum Prediction Markets
Mar 23, 2022
6 min read
Exploring Nezha’s Revolutionary Positive-Sum Prediction Markets
Nezha will soon make its debut in the crypto sphere through a multi-platform IDO, which will make our $NEZ token available to our community for the first time.
But before we welcome new users and token holders to our ecosystem, we want to build a solid foundation of knowledge and material to help you understand why Nezha was founded, our position in the market, and what makes our solutions unique.
Here, we’re going to examine Nezha’s cutting-edge positive sum smart yield routing, discover the benefits of our approach, and explore why we chose Solana as our first go-to blockchain protocol. But before we begin, let’s discover what prediction markets are.
What are Prediction Markets?
To help us understand why Nezha is a revolutionary concept, we must first briefly examine prediction markets as a concept and an instrument of speculation.
For the uninitiated, prediction markets are created for the purpose of speculating on the outcome of an event — which could be as diverse as an election outcome, who’s next in line for an Oscar, or even when the next Apple product launch will be.
They are typically a zero-sum game, in that they are essentially a binary option with only two outcomes; win or lose. Therefore, a prediction market player typically stands to either lose their entire stake, or win — there are no additional ways to win or realise different outcomes.
The internet kickstarted the popularity of prediction markets, and blockchain technology added another layer of functionality, ease of access, and decentralization to the traditional prediction market model. But, to date, there has been little in the way of innovation or paradigm shifts within the prediction market ecosystem, and it’s still a zero-sum game. Until now.
How is our solution and technology unique?
At its core, Nezha’s revolutionary prediction markets are powered by smart yield routing across third-party DeFi protocols, which generate — and subsequently distribute — yields to our prediction market participants. This mechanism, paired with the high yields of DeFi, enables Nezha to optimize yields for its users beyond that of traditional prediction markets. This is all explained in detail in our whitepaper already, but what does this actually mean in simple terms?
When players use Nezha-based games and prediction markets, they stake crypto assets into NEZ protocol smart contracts, which essentially contribute to Nezha’s total value locked (TVL), much like other DeFi protocols. These tokens then remain locked until the end of each game’s staking cycle. It’s at this point that Nezha’s smart yield routing takes over, identifying opportunities and using these funds to leverage and take advantage of the highest and most stable APYs that DeFi has to offer.
The benefit of this approach is two-fold. For Nezha’s community and users, we can finally provide a positive-sum predictions market environment, powered by the unparalleled opportunity and yield generated by the decentralized finance market. But how do we ensure that instead of the all-or-nothing approach of traditional prediction markets, Nezha players can take advantage of a positive-sum environment?
As we have already examined above, when a user places their stake into a NEZ protocol smart contract, this liquidity is used to generate DeFi yield. But, if a Nezha user speculates on a prediction market outcome and loses, they don’t lose this initial stake. Instead, they only forfeit the yield their liquidity made while it was locked into the NEZ smart contract. Therefore, the only loss is essentially only a small lost opportunity cost, compared to traditional prediction markets where the loss of initial capital would be 100%. Conversely, if they win, they are distributed the yields which accumulated on their stake during the course of the game or prediction event.
On the other hand, for the Solana ecosystem and other layer one blockchains on which Nezha builds, Nezha functions as an unparalleled liquidity engine driven and powered by the very users of the blockchain upon which we are building. This approach not only provides better rewards for Nezha users compared to traditional prediction markets by leveraging the phenomenal returns of the DeFi market, but it also helps build a strong and sustainable on-chain economy for the world’s most promising layer one blockchains, and therein lies the transformational power of Nezha.
Nezha will host several liquidity pools to support this functionality, including the core prediction pool, a rollover pool, an affiliate flywheel pool for referral bonuses, and the Nezha Foundation pool — all of which will be explored in greater detail in a future article. But now, let’s look at our choice of layer one blockchain.
Why did we choose Solana?
Firstly, we should start by reminding our community that Nezha will eventually be blockchain agnostic — that is, able to run cross-chain and interoperable with a number of layer one blockchains. As some of you may know from our whitepaper, we also plan to deploy for the Cardano blockchain once our platform has reached maturity on Solana.
Solana is an exciting and rapidly expanding ecosystem with a huge and dedicated community. With a focus on scalability and affordability, it has rapidly become one of the leading smart contract blockchains of choice for developers worldwide, who are seeking an alternative to Ethereum’s rampant network fees.
Solana already has a vibrant staking ecosystem, with some 75% of all SOL actively staked within the network, and supported by a growing range of crypto wallets and exchanges. This is quickly paving the way for advanced DeFi protocols — with multiple live DeFi protocols running on Solana at the time of writing.
By extension, this is also good for Nezha. Not only can Solana provide lightning fast transaction finality and affordable transactions to Nezha’s users, but it is also a rapidly expanding ecosystem in need of liquidity providers, which is the perfect opportunity for our project to grow rapidly alongside the Solana protocol.
We look forward to welcoming new users to Nezha’s community in the coming weeks, and we will be looking for opportunities to connect with the wider Solana ecosystem. So, if you’re interested in being at the forefront of the prediction market revolution, make sure you follow us on social media here:
- Twitter — https://twitter.com/NezhaFi
- Telegram — https://t.me/joinchat/PwQuQFS9bbY0ZGZi
- Discord — https://discord.gg/FtCfkRtb64
- Website — https://www.nezha.fi/