What is Positional Warfare (PWT)?

Since the year 2020, DeFi has been rapidly emerging in the cryptocurrency community, and currently, the DeFi ecosystem consists of mostly open-source projects that aim to make the financial world more open and freer with the help of blockchain and smart contracts. Because of its open-source and combinable, DeFi is rapidly accumulating capital stock in the DeFi world and is rapidly gaining popularity in the crypto community.

Data in DeFiPulse shows that total value locked (TVL) currently into DeFi agreements began increasing rapidly last summer, soaring 150 percent in less than four months from 2021 to date, and is already up to nearly $40 billion.

Potential stocks in DeFi — Derivatives market

In the traditional financial market, the volume derivatives can reach 40–60 times that of spot. In the past year, the transaction volume of Uniswap has exceeded $100 billion, so it can be deduced that in the DeFi world, the trading volume in the derivatives track can reach at least the trillion-dollar level, and that there could be multiple Uniswap scale projects in the DEFI derivatives sector.

According to DeFiPulse data, the current derivatives lock-up in DeFi is only $2.4 billion, which is currently less than 1/10 of the size of the DeFi world, and there are no representative projects like Uniswap’s spot trading. Therefore, we are sure that in 2021, a representative project like Uniswap will emerge in the DeFi derivatives market, and that is why we are launching Positional Warfare (PWT).

What is positional warfare?

Positional warfare (PWT) is a short-term non-custody predictions platform based on Heco. PWT makes market profits by allowing traders to maximize their expertise by participating in 5 custom time forecasts such as 5-minute. 10-minute forecasts of digital currency prices and other custom events prediction, and then make market profits from their forecasts. Anyone can use Positional warfare to create a prediction market based on the AMM automatic market making algorithm.

Convert prediction into a liquidity pool

Positional warfare is a decentralized, open protocol that allows anyone to convert their predictions into tokens and put them into the market of AMM automatic market-making algorithm by opening a market based on digital currency price forecasts and further tokenizing them, and fluctuating their market values relative to changing market odds.

Positional warfare creates a system including three smart contracts for each prediction event:

• The first contract acts as a custodian, holding the pool of funds that forecast the market, the relevant digital currency price forecasts, and the related forecast event data. For example, creation date, validity period, asset type, forecast price variable, and so on.
• The second contract is responsible for handling the function of the oracle machine. In the specific price forecast, the oracle machine is notified to invoke the contract at a specific time in the future.
• The third contract is responsible for generating the corresponding “Put” Token and “Call” Token, for the two predicted directions and initializing the forecast returns (such as 1USDC), and then creating a trading pair and liquidity pool of Put/USDC and Call/USDC based on AMM, in which the user can trade “Put” and “Call”, in which the user will automatically price “Put” and “Call” according to the liquidity and buying and selling of the trading.

Users can add tokens representing these prediction directions to the AMM liquidity pool by trading on the DEX platform, predict in real time or exit before the end of the event.

Positional warfare’s vision is to mark predictions into tokens, thus translating their predictions directly into liquid assets and liquidity pools. It is not limited to the cryptocurrency market, but also opens access to other markets in the future, such as foreign exchange and commodities. Even the prediction of the results of sporting events. In this way, we can open access to traditional markets, such as foreign exchange, stocks and sports lotteries, and help cryptocurrency communities access these markets.

To sum up, Positional warfare’s highlights integrate the capabilities of three important markets in the encryption market: Predictions, DeFi and Trading.

What is the prediction market?

Simply put, prediction markets are derivatives markets created based on verifiable and clear facts about the future. Because of blockchain technology, the prediction markets have gained characteristics of openness, trustworthiness and immutability.

For example, the hottest topic in the prediction markets last year was betting on who would win the 2020 U.S. election. Other questions such as which team/player will win a sporting event, will vaccine prevalence in the U.S. exceed 30% by April 2021, and will the price of Bitcoin be above $50,000 by June 2021? These questions occur at some point in the future and the result is clearly verifiable, making them suitable for predicting the markets.

In addition to the fact that events occur in the future and that events can be obtained with clearly verifiable results, the prediction markets still involve trading characteristics. Participants can make judgments about the outcome of future events and bet on them, making a profit if the prediction is correct according to publicly verifiable rules.
There is a possibility of black-box operation in traditional prediction markets and the possibility that the counterparty may not make compensation. After all, the data may be tampered with by the project, the database may be hacked, and the counterparty may not be able to find the person. And thanks to the immutable, open and transparent nature of the blockchain, crypto prediction markets have emerged.

Vitalik continues to support the prediction markets

Besides following the progress of Ether 2.0/Layer 2.0, Vitalik is also interested in topics related to the prediction markets and continues to disseminate the prediction markets.

A tweet dated September 22, 2020 mentioned:

• Prediction Markets may be one of the most underrated categories of ether dapps right now. Omen and Augur v2 are both running and have active markets with pretty decent liquidity.

A tweet dated November 4, 2020 mentioned:

• Regardless of who wins from here, I definitely think that the prediction markets have proven themselves more accurate than the polls/models this time around.

A tweet dated February 18, 2021 mentioned:

• Some reflections on my experiences participating in the prediction markets in this last election, and the nature and limits of rationality, market efficiency, arbitrage and mechanism design.

Therefore, it can be judged that due to the rise of DeFi in 2020, the demand for transactions in the derivatives market has not been met at this stage. Vitalik continues to support that in 2021, the prediction markets have a high probability of being the next areas with the greatest investment potentials in DeFi.