If you have to stake your USDC, isn’t this still locking up USDC, the thing you were trying to avoid doing?
No, not really. In fact, staking USDC (i.e., lending it to other people, or providing liquidity between coins) seems decently profitable right now. As with everything, there are riskier and less risky ways to go about it, and for this prediction market setup, I’d choose one of the less risky ones.
So normally, when you make a bet in, say, Polymarket, the money which you stake is kept by a contract until the question is resolved. But it’s not yielding anything, it’s just sitting there. And making it yield in the meantime a) is more profitable, and b) solves a problem of not being able to bet on long-term things, because now you’re resistant to inflation+you win more money as time passes. I think that previously, some individuals (Caplan?) used to bet US stocks instead of cash for that reason, but I can’t find a reference.
So to answer your question,
To bet in prediction markets you’d have to lock up USDC anyways for the duration of the bet
(Note that you can exit early by making the opposite bet and then merging shares; this would be the same in the new system. But the point is that between betting and exiting, the capital is just sitting there.)
Yes, this adds an additional layer of risk depending on the method used to generate yield, but I think this is worth it.
Also its maybe worth noting that the idea is not unique to Hedgehog markets/its been in the water supply for a while, it’s just that Hedgehog markets might be the first to get to a working implementation.
Right now, nothing; they are not even on the main blockchain yet (they’ll launch in a few months) Eventually, they could use USDC, or some other stablecoin, and those would have value.
It’s a competition, i.e. only one of the services they eventually intend to offer.
The tokens have value because there are prizes: “But of course, since it’s a competition, there are prizes to be won — users can trade their way onto the ROI Leaderboard for a share of the competition prize pool.”
Prizes are financed via the interest gained by lending away the UDSC for the duration of the competition (just as if Hedgehog were acting as a classical bank, I suppose): “Thanks to DeFi composability, Hedgehog can direct the USDC staked by users towards a Solana lending protocol for the duration of the competition. All of the yield generated from these deposits goes back to users in the form of competition prize pools.”
The linked post ends with a full page of disclaimers.
With regards to locking up USDC: I’ve only just started reading up on Ethereum (e.g. this post), but from my very rudimentary understanding, I suppose the point here is that USDC is a stablecoin pegged to the price of 1 USD, so locking up USDC does not expose you to the same volatility as would happen if you locked up the equivalent amount of ETH instead.
Can you explain the no-loss competition idea further?
If you have to stake your USDC, isn’t this still locking up USDC, the thing you were trying to avoid doing?
What gives the game tokens value?
No, not really. In fact, staking USDC (i.e., lending it to other people, or providing liquidity between coins) seems decently profitable right now. As with everything, there are riskier and less risky ways to go about it, and for this prediction market setup, I’d choose one of the less risky ones.
So normally, when you make a bet in, say, Polymarket, the money which you stake is kept by a contract until the question is resolved. But it’s not yielding anything, it’s just sitting there. And making it yield in the meantime a) is more profitable, and b) solves a problem of not being able to bet on long-term things, because now you’re resistant to inflation+you win more money as time passes. I think that previously, some individuals (Caplan?) used to bet US stocks instead of cash for that reason, but I can’t find a reference.
So to answer your question,
To bet in prediction markets you’d have to lock up USDC anyways for the duration of the bet
(Note that you can exit early by making the opposite bet and then merging shares; this would be the same in the new system. But the point is that between betting and exiting, the capital is just sitting there.)
Yes, this adds an additional layer of risk depending on the method used to generate yield, but I think this is worth it.
Also its maybe worth noting that the idea is not unique to Hedgehog markets/its been in the water supply for a while, it’s just that Hedgehog markets might be the first to get to a working implementation.
Right now, nothing; they are not even on the main blockchain yet (they’ll launch in a few months) Eventually, they could use USDC, or some other stablecoin, and those would have value.
From reading further through the Hedgehog Markets link:
It’s a competition, i.e. only one of the services they eventually intend to offer.
The tokens have value because there are prizes: “But of course, since it’s a competition, there are prizes to be won — users can trade their way onto the ROI Leaderboard for a share of the competition prize pool.”
Prizes are financed via the interest gained by lending away the UDSC for the duration of the competition (just as if Hedgehog were acting as a classical bank, I suppose): “Thanks to DeFi composability, Hedgehog can direct the USDC staked by users towards a Solana lending protocol for the duration of the competition. All of the yield generated from these deposits goes back to users in the form of competition prize pools.”
The linked post ends with a full page of disclaimers.
With regards to locking up USDC: I’ve only just started reading up on Ethereum (e.g. this post), but from my very rudimentary understanding, I suppose the point here is that USDC is a stablecoin pegged to the price of 1 USD, so locking up USDC does not expose you to the same volatility as would happen if you locked up the equivalent amount of ETH instead.