By
Alex Manuylov
December 29th, 2021
Compared to the traditional Constant Product Market Maker (CPMM) model, Zeitgeist’s DLMSR approach reduces slippage dramatically.
Zeitgeist, a leading protocol in the decentralized prediction market space, has announced the launch of its Dynamic Logarithmic Market Scoring Rule (DLMSR) based Automated Market Maker (AMM). This cutting-edge development represents a leap forward in the blockchain prediction market sector, introducing a dynamic liquidity model that promises to redefine operational dynamics within the industry.
The Zeitgeist DLMSR Model: A Paradigm Shift in Blockchain Technology
According to a press release shared with Coinspeaker, the DLMSR model introduced by Zeitgeist stands as a first-of-its-kind application in the ecosystem of blockchain technology. Unlike traditional AMMs, the DLMSR model enhances market creation and liquidity provision, minimizing slippage and thereby revolutionizing trading efficiency, particularly in larger trades. This pioneering approach is poised to reshape the landscape of prediction markets on blockchain platforms.
Notably, the technology powering the new DLMSR-based AMM is open for use by any prediction market platform looking to leverage the Zeitgeist protocol. This inclusivity broadens the impact of this revolutionary technology, offering a glimpse into the future of decentralized forecasting.
Compared to the traditional Constant Product Market Maker (CPMM) model, Zeitgeist’s DLMSR approach reduces slippage dramatically. This reduction in slippage is a game changer, allowing traders to achieve more profitable results, particularly in markets with high skewness. Markedly, the DLMSR approach exemplifies Zeitgeist’s ongoing commitment to innovation and improving user experiences in the decentralized prediction market space.
Overall, Zeitgeist’s DLMSR-based AMM marks a big step forward in the evolution of decentralized prediction markets in the DeFi ecosystem. By combining machine learning principles with market scoring standards, the platform not only tackles current issues but also establishes a new standard for responsiveness and accuracy in forecasting future events.
Prediction Markets as Information Machines
Prediction markets serve as powerful information machines, aggregating insights and enhancing decision-making processes. Investors participate by purchasing ‘yes’ or ‘no’ contracts based on their beliefs about future events, with prices reflecting the probability of those events occurring. When compared to traditional methods like opinion polls, focus groups, and expert opinions, prediction markets have consistently proven to produce estimates that are at least as accurate, if not superior.
In 2021, Zeitgeist successfully completed a $1.5 million seed round with investments from key players such as D1 Ventures, Genblock Capital, AU21 Capital, Digital Renaissance, A195 Capital, Four Seasons Ventures, Brilliance Ventures, BlockSync Ventures, co-founders of Acala, and an individual from the Web3 Foundation.
