Ever since I was a child, I wondered: “If we can track the performance of (and invest in) companies, why can’t we do the same for people?”. A celebrity’s rise to fame is not so different from what the most successful startups have been doing for centuries.
It turns out this question is not entirely straightforward. Some companies, such as Fantex, have tried to create SEC-compliant securities that are tied to the future cash flows of professional athletes. Fantex was even able to sign up NFL Pro Bowl tight end Vernon Davis. But as you can imagine, setting this up involves an incredible amount of complexity…can you really “own” a person in the same ways you can a company? As of now, this model has not yet been proven to work at scale.
Then came the world of cryptocurrency and ICOs, which got me thinking…what if a celebrity created their very own utility token and launched an ICO? Theoretically, the price of the token — assuming the economic model is set up properly — could be representative of the person’s success. But the legal and regulatory risks in launching an ICO of this nature (or any ICO for that matter) would surely deter any smart person from raising money through this type of mechanism.
Then I came across Augur, a decentralized prediction market platform. Built on Ethereum, Augur is one of the most fascinating projects I have ever encountered. By decentralizing the traditional prediction market model, Augur provides global access to a new world of financial markets. While Augur’s oracle is built around predicting future events, I believe that a basket of future events (along with their probabilities) can be used to track a person’s success. And because there is always a mark-to-market value which represents the probability of an outcome occurring, we can create indexes for individual people. It was on this idea that Pdot was born.
A Pdot index is a price-weighted index derived from a basket of speculative positions in various decentralized prediction markets on Augur (similar to the Dow Jones Industrial Average for U.S. stocks). For each index, the portfolio manager will carefully construct a portfolio that tracks the “success” of the index’s target while optimizing for stated levels of volatility. Each underlying position is designed to track performance across one or more of the following dimensions: Achievements & Accolades, Financial Success, and Popularity.
These indexes will offer unique insight into today’s most iconic figures in sports, entertainment, business, and politics. This is powered by a concept known as wisdom of the crowd, which states that a collective opinion of a group of individuals can often be superior to that of a single expert. Just like the Dow Jones Index is a measurement of the broader U.S. economy, a Pdot index is a measurement of an individual person’s success.
The mission of Pdot is to extract new insights from the Augur platform and then share those insights with the world. Someday people will be able to trade shares in a Lebron James index fund just as easily as they can shares in an S&P 500 ETF. I look forward to building towards that future.
Follow us on our journey at www.pdotindex.com!
