Futarchy — a proposed governance system where measures of national wellbeing are defined, and prediction markets are used to choose the most optimal policies — has been discussed and debated since it was proposed in 2007 by economist Robin Hanson.
The basic premise can be illustrated by the following diagram — providing an example of a number of key steps within a Futarchy-based governance system.
In this example, a question is asked, and an outcome of what would be predicted to occur if a decision is enacted.
A decision can then be made based on this data and voted into existence using tokens — essentially asking participants to bet on this decision. If the vote does not go through, the tokens are refunded.
After a period of time, the winners of the vote will be evaluated against data that proves how accurate their prediction was made and rewarded (or not) based on the accuracy of their prediction compared to the outcome.
The idea behind this type of governance model is to ensure that people put their money where their mouth is — and try to vote for decisions that have the best likelilhood of making a positive outcome. When the voters choose outcomes that play out positively, they can be rewarded — giving each voter a type of “skin in the game”.
Prediction in Freeos
Freeos — as a democratic economic system on the blockchain — includes a number of unique governance aspects.
One aspect of Freeos that has some similarities to Futarchy is related to how the community predicts— and then votes—to enact an economic policy which affects their own economic outcome.
The prediction feature of Freeos is called Community Sentiment Analysis.
The Community Sentiment Analysis occurs prior to the weekly economic voting that mints the equal distribution of FREEOS tokens to all active participants.
Questions are asked about the wider economy (Bitcoin and total cryptocurrency market that is reflecting the Freeos participants’ sentiment.
An example of such a question might be: “Do you feel the general Bitcoin and cryptocurrency market is in a bull market (growing) or a bear market (shrinking)?”
Once the questions are surveyed about the wider economy, additional questions are asked about the state of the Freeos economy, such as: “What do you predict the price of a FREEOS token will be in a week’s time?”
These questions are collated and reflected back to the participants as charts, data and graphs in a dashboard.
This data is used by the participants to make informed decisions before they vote. The data gathered may also prompt the users to know what parameters can be chosen to act on what the community is predicting.
Once the community votes — and the vote will be enacted to change the economic policy— FREEOS tokens will be minted.
Since the result of the economic policy directly affects the participants — the financial incentive will likely prompt the users to make the best possible decision for the greater Freeos economy.
After all, with an even distribution, a decision that affects the individual, affects everyone else.
Similarities and Differences
Unlike Futarchy, the Freeos Economic System does not specifically incur profits/losses only only on an individual basis.
Instead, Freeos indirectly lets market forces impact every participant by letting market forces reflect whether the decision was net positive or negative.
But similarly, predictions are used to steer directions by putting a voter’s economic outcome on the line.
With Freeos, this has the added benefit of using the predicted outcomes to help align the community of participants to work together on an outcome that benefits everyone.
And since a decision that is good for the whole is also good for the individual—especially in a system where everyone is rewarded equally—the Freeos Economic System aligns individual incentives with group incentives.
Thus, Freeos creates a system where cooperation is intrinsic at its very core.
For more on Freeos, please check our webpage for more info, or join us in our Discord community where you may ask more questions about how Freeos is intended to work.
