Ethereum (ETH) co-founder Vitalik Buterin is questioning the direction of prediction markets, warning that they are drifting toward short-term speculative betting and away from broader societal value and proposing a radical redesign that could challenge the role of stablecoins in crypto.
In an X post on Sunday, Buterin said prediction platforms have achieved meaningful scale, with enough volume to support full-time traders.
But he argued they are “over-converging to an unhealthy product market fit,” increasingly focused on crypto price bets and sports gambling that deliver revenue but little long-term informational value.
From Speculation To Hedging
Buterin framed the issue around who ultimately loses money in prediction markets.
Today, he suggested, much of the model depends on “naive traders” placing poor bets.
While not inherently immoral, he warned that overreliance on this dynamic incentivizes platforms to cultivate low-quality engagement, a slide he described as “corposlop.”
Instead, he argued markets should prioritize “hedgers,” with participants willing to accept small expected losses in exchange for reducing risk.
In one example, he described investors holding biotech stocks who might use political prediction markets to hedge election outcomes that affect their portfolio exposure.
Also Read: Tether Backs Dreamcash To Launch USDT-Collateralized Equity Perpetuals On Hyperliquid
In this framing, prediction markets become insurance mechanisms rather than entertainment products.
Beyond Stablecoins
Buterin’s most forward-looking idea goes further.
He questioned whether users ultimately want USD-backed stablecoins at all or whether they simply want price stability tied to their real-world expenses.
He proposed a system where users hold personalized baskets of prediction market shares linked to price indices of goods and services they actually consume.
A local AI model could generate a tailored hedge representing a set number of days of expected expenses.
In that model, fiat currency becomes unnecessary. Users could hold volatile assets like ETH or equities for growth and rely on prediction market hedges for stability.
Practical And Regulatory Hurdles Remain
The concept would require deep liquidity, sophisticated pricing mechanisms, and assets denominated in something participants want to hold.
It also raises regulatory questions, particularly if such markets resemble synthetic exposure to real-world economic outcomes.
Read Next: Armed Gang Targeting Binance France Executive Arrested After Failed Raids Across Paris Region