This feels good to me. I have done a little work with Ezra and I trust him to make good markets. Ezra, I thin you've got some markets up already. Could you link them?
This grant will be used to create subsidized real-money prediction markets on high impact topics including AI progress, geopolitical risk and nuclear proliferation. This project will be carried out in partnership with Polymarket.com with the collaboration of Nuño Sempere. I will work with the Polymarket team, and the EA/Forecasting community to create a number of markets on topics related to existential risk. Once markets have been launched on the Polymarket platform, grant funds will be used to subsidize markets using an automated market maker (AMM) trading bot that will provide liquidity for users to trade against and encourage participation from traders. Funds will be deployed by Nuño Sempere, who is a Spanish citizen and can legally trade on Polymarket. This project aims to create a scalable solution for incentivizing research into topics which are proxies for existential risk, including; nuclear proliferation, the development of major wars, progress of transformative technologies like semiconductors, and other important decision-relevant questions. For these types of questions, our approach will generate highly accurate forecasts through the mechanism of price discovery.
The goal of this project is to foster a prediction market ecosystem centered around forecasting civilizationally important questions. The advent of cryptocurrency has led to major growth in the prediction market industry. Despite this growth, the vast majority of trading is on topics related to pop culture, sports, and electoral politics. Meanwhile, EA institutions have prioritized funding “play-money” prediction markets such as Metaculus and Manifold over real-money platforms. This project aims to bridge this divide between the EA/Rationalist forecasting community and real-money markets.
While useful, play-money platforms such as Metaculus have limitations. The lack of financial incentives for forecasters limits both the number of forecasters and the amount of time invested in researching by forecasters. Accordingly, forecasters are predominantly hobbyists within the EA/Rationalist community. By creating highly liquid markets, we will allow top forecasters to profit from their talent and time, incentivizing greater research, and market participation from a broader subset of individuals.
This project will be carried out in partnership with Polymarket.com. I will work with the Polymarket team to create a number of markets on high impact topics (Geopolitics, AI, etc.). Grant funds will be used to subsidize markets using an automated market maker (AMM) trading bot which will act as ‘dumb-money’ incentivizing user participation. All funds deployed will be sent from Nuño Sempere, who is a Spanish citizen and can legally trade on Polymarket. Due to Polymarkets decentralized architecture and non-custodial wallets this process can be achieved while maintaining sole custody of funds. Markets will be resolved using Polymarket’s decentralized oracle system based on the UMA optimistic oracle.
Polymarket is the optimal partner for this project for a number of reasons. Polymarket is a decentralized platform and therefore there is minimal risk of grant or user funds being stolen or improperly accessed by the Polymarket team. Polymarket is also by far the largest prediction market with thousands of users and millions of dollars of volume traded. Furthermore, Polymarket does not collect any fees on transactions, deposits, or withdrawals. While they do not have the resources to execute this project themselves, they are highly interested and willing partners.
I am the former Head of Markets at Insight Prediction, a prediction market startup. In this role, I developed markets that forecasted the Russian Invasion of Ukraine, generating over a million dollars in volume.
In April 2023, I raised $8,000 to launch a pilot program exploring the idea of subsidizing EA relevant markets on the Polymarket Platform. I have since partnered with Nuño Sempere and we are currently subsidizing markets on the Ukraine War, AI Progress, and North Korean Nuclear tests. We have already set up the trading bot, and I have built a relationship with the Polymarket team.
Nuño is a programmer, researcher and consultant. He is responsible for building the prediction aggregation website Metaforecast and is a leading researcher on designing prediction markets and forecasting tournaments. You can find Nuño’s work on his website Measure is Unceasing.
Total Request: $90,000
$57,000 - Market Subsidies
These funds would be deployed through AMMs in order to boost liquidity and act as the ‘dumb money’ in the market. Funds will be used until they are exhausted.
$25,000 - 6 Month Salary Ezra Brodey (Below Market):
I would use this money to quit my job as a paralegal and work full time on this project. Expected time allocation:
40% - Writing/Researching Questions
Coordinating between experts in existential risk and Polymarket, I would write prediction market questions which create interesting actionable forecasts, and are suitable for real-money markets.
Writing good prediction market questions is difficult and takes significant research. Questions must be interesting, relevant, and have a resolution source which can’t be manipulated. I am uniquely well suited to this challenge having already done this while working as Head of Markets at Insight Prediction.
40% - Research
I would allocate 40% of my time towards conducting prediction market research. There is a decent literature comparing the accuracy of real and play-money prediction markets, however these studies are limited by the quantity of prediction market data. This project would provide a unique opportunity to further study the merits of prediction markets as a forecasting tool relative to play-money platforms as well as study the effects of liquidity on market volume and accuracy,
10% - Promotion
I would allocate 10% of my time towards promoting the markets on Twitter and other social platforms. This would also include an introductory post on LessWrong/EA Forum introducing my project, as well as subsequent posts analyzing specific markets and providing context.
10% - Organization Building
I will use 10% of my time exploring how to scale this project and to potentially start a 501(c)(3). I will seek out relevant mentors to guide me through this process.
$8,000 - Nuño Sempere development
These funds will be used to cover Nuño’s operating costs as well as pay for Nuño to improve the liquidity bot which deploys capital onto Polymarket.
Nuño has already set up and deployed a standard AMM trading bot which functions effectively. Nuño will further improve this bot, allowing for staggered liquidity deployment along with exploring other potential upgrades.
We previously raised $8,000 to run a pilot version of this project through the ACX Mini Grants competition. We have also applied for funding through Light Speed grants and are currently awaiting a response.