What are prediction markets?
A prediction market is any market where participants can trade futures contracts based on the outcome of future events. Prediction markets encapsulate all forms of betting markets, allowing traders to speculate on the outcomes of political elections, sporting events, relative price action between currencies, and so much more.
Prediction markets are a great way to gain exposure to both financial and non-financial events, allowing traders to “bet on their beliefs”. Furthermore, as prediction markets mature and attract large numbers of participants, the prices of positions within a market become a robust means of gauging public sentiment. This is a secondary use case of prediction markets, which offer both a valuable product and create meaningful data insights.
What is Layer 1.5?
Layer 1.5 is the base layer infrastructure that offers additional functionality for case-specific dApps to be created. It is the modular infrastructure that allows novel DeFi products to be quickly and effortlessly spun up on Sei. This “plug-and-play” style infrastructure will significantly lower the barrier to entry for new and innovative products to be developed on Sei. It also improves the developer experience as dApps will be able to access advanced functionality on top of the powerful orderbook and order matching experience offered natively on Sei.
What is Kargo?
Kargo is building the first Layer 1.5 on Sei. Its base layer contracts will serve as modular infrastructure unlocking prediction markets globally. Current prediction markets are focused on large-scale/global events (ie. Who will win the World Cup? or Who will be the next POTUS?) however they fail to capture audiences for smaller events and communities, and the contextual nuances around them.
Kargo seeks to change that by enabling local teams to create local markets. For example, it’s a poor use of time for a team in the US to pursue Indian Cricket betting or Brazilian politics, but a strong local team can easily create those markets using Kargo’s infrastructure. These local teams will have greater insights and larger platforms to create thoughtful and enticing markets. Kargo targets the long tail of speculative events with niche and underserved communities, fostering greater engagement for such events.
What does this partnership enable?
This partnership enables strong teams with local context to develop independent prediction markets using Kargo middleware. These markets can encompass events of all sizes, in order to capture novel events (E.g. local politics, and local sports betting). These novel markets will be synergistic with Sei’s built-in order-matching engine, enabling frequent orderbook updates and tight spreads on assets.
Sei is the fastest layer 1 blockchain committed to providing best-in-class infrastructure to develop and scale DeFi protocols across Web3. Current L1s fall into a barbell distribution with general-purpose chains (ie. Ethereum and Solana) on one end and app-specific chains (ie. dYdX and Osmosis) on the other. Sei explores the middle of this distribution by offering a custom-built DeFi-specific chain. Sei offers both composability and customizability, opening up entirely new design space for protocols building on Sei and unlocking new capabilities and possibilities for all of DeFi.