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.
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.