Reality Cards is a prediction market that allows you to “own” (actually rent) an event’s outcome, which is represented by unique encryption using NFT, and by leveraging the Ethereum blockchain.
Prediction markets have established themselves as effective prognostic tools. They reflect the actual consensus of people on social, political, and economic issues. But even more so, advocates on each side of a controversial issue can put their money, whether that be cryptocurrency or fiat, where their mouth is.
Reality Cards disrupts the regular concept of how a prediction market works by letting you own the outcome of events instead of simply betting on them.
Andrew Stanger, the founder of Reality Cards, was an accountant, then a programmer, who was bothered by the current prediction market’s low liquidity. He created Reality cards to leverage the current economic models made possible by the Ethereum network.
After discovering the “This Artwork Is Always On Sale” project, he conceptualized a prediction market based on Non-Fungible Tokens (NFT), creating a prediction market where the alternate predictions can be bought and are also always on sale.
In coalition with his Co-founder, Vlad Micluic – who brought the extra experience need to bring Andrew’s creation to life – they started building the framework of what is now known as the beta version of the market.
What is Reality Cards?
Reality Cards is a prediction market that allows you to “own” (actually rent) the event’s outcome. These outcomes are represented by unique encryption using NFT and by leveraging the Ethereum blockchain.
Instead of betting on or staking a position on the outcome of an event. You can own the Non-fungible token (cards) that the outcome is represented by.
Reality cards would be the first prediction market that leverages the NFT technology, making it unique from every other prediction market available till now. The project is still currently in its beta-test phase.
What is a Prediction Market?
Here is a simple brief for those new to the term. A prediction market is one where a group of people speculate on different possible outcomes of an event.
In the market, you can place a bet on what you feel is the most probable outcome of an event. You are able to stake (using money or virtual tokens) on the outcome you think is probable.
For instance, the United States presidential elections. If you had felt strongly that Biden would win the election, you stake on that likelihood. And if he wins, you get a share in the total lot, while those who took positions on Trump winning lose their stake.
Prediction markets usually work in binary, that is, you can only stake on either event A would happen or event B would happen. In this way, the stock price is bound from 0 to 100. The amount of people who buy into any of the two events affects its stock price – so when the stock price of event A is 60 units, the price of event B is automatically 40 units.
This way, one can deduce people’s general opinion on the likelihood of various events with the stock prices. That is 60 units on event A means that people feel a 60% chance of event A happening.
How Does Reality Card Work?
As Reality Cards distinguishes itself from other prediction markets, users are able to own the NFT associated with their preferred outcome.
But this ownership is, in fact, a rental. Each outcome has only one NFT card representing it in the entire universe. So if you want to bet on a particular outcome, you have to own it.
How to Own a Card?
Each NFT card (representing a single outcome of a particular event) has a given price. This price, however, only reflects the daily rental prices in xDai. Every cardholder pays a daily rent. You can continue paying the rent on any particular card until someone willing to pay a higher rent than you come along.
This new owner must pay at least 10% more than you currently are per day (We will explain the payment process shortly). However, not holding the card does not cancel the bet you placed on the outcome. Instead, the overall available amount at the end of the event is shared based on the duration with which you could hold on to the card.
The incremental price for the outcome card is able to reflect how people have owned it. And in sequence, how much people are optimistic about that particular outcome.
It should be noted that each newcomer’s increased rent does not go to the previous owner. It is all added up together to make the pot for the wager. After the events have passed and the correct outcome is verified, the total amount paid is congregated and shared amongst the winning party.
The other set of people who have previously owned a card that represented the wrong outcome lose their rent and go home with nothing.
Paying Rent with xDai
xDai is the name of a stablecoin as well as its stablechain that lives on the Ethereum platform. It is a reliable cryptocurrency that is fast for processing transactions and whose exchange rate is predictably stable.
It was chosen as the means of payment on the Reality Card market because of its impressive features. It uses a single token (xDai coin), its transactions are fast, and its exchange rate is stable.
As you must pay rent to stake on an outcome in the Reality card market, you do so using xDai tokens.
To use xDai, you have to have Metamax wallet installed and unlocked. This wallet allows converting DAI tokens on the Ethereum Blockchain into xDai tokens.
Deposits on Reality Cards
During the process of staking on your preferred outcome, by renting a card – you fill a contract along with deposits to pay your rent. Your rent only lasts as long as your deposits do. As soon as your deposit runs out, you lose the card.
You should note that the deposits you make are only valid for the particular event you staked them on. It won’t affect any other events you have.
You are entitled to withdraw your deposits at any time you want, as long as it has not yet been used for rent. And this way, you can channel it into another outcome card you want to own.
However, when the newcomer runs out of rent to pay, the card is automatically returned to you, provided you still have deposits left, if not, the card is returned to the owner before you, and so on. Hence, unused deposits are not automatically returned. And you have to manually request it, even when you no longer own the card.
How to Win on Reality Cards
After the end of the event, all the rent paid by each party of opposing outcomes is summed up and then shared among the winning party.
The percentage you get from the total depends on how long you owned a currency for. If you get outbid for the rent of a card, you are still entitled to the share of the outcome.
After the event has passed and the winning outcome has been rewarded, the user who held on to the card the longest is given the now stale NFT card as a token or collectible.
As the application of blockchain increases, innovators are able to leverage the technology to improve existing ideas. As Reality Cards becomes the first NFT-based prediction market to successfully launch, we shall see more and more marriage between the two previously separate crypto subsectors.
With 2021 looking more like the year for the DeFi and NFTs, we shall see more and more of these types of projects in the long run.