Jul 19, 2020
What is Reality Cards?
Reality Cards is the world’s first NFT-based prediction market. What makes it unique is that outcomes are not “bet” on, instead they are owned.
With Reality Cards, the typical shares, limits, bids, and asks do not exist — even “odds” are abstracted away and replaced by a “daily rental price”. This is only one of its unique features. What Reality Cards is building has yet to be seen with any other available prediction market, and the fun is just beginning!
Background & Inspiration
Reality Cards was created by Andrew Stanger. Andrew had been following the various Ethereum prediction markets ever since the Augur ICO, but was disappointed by their low liquidity. He wondered if it was possible to create an entirely new type of prediction market based on new economic models Ethereum had made possible.
As part of his research he explored NFTs and Harberger Taxes and ultimately discovered a project called “This Artwork Is Always On Sale” — a unique experiment where a piece of art is quite literally, always on sale, which provided the direct inspiration for Reality Cards.
In a sentence — Reality Cards is what happens when you combine a prediction market with an ‘always for sale’ mechanic.
The project began life as Andrew’s final project for the Consensys Solidity Bootcamp which began November 2019, where he first began to learn Solidity. Previously he was an Accountant for nearly a decade before taking the leap into Ethereum.
Shortly after the bootcamp Andrew met his co-founder Vlad Micliuc. As a long term developer and previous Ubisoft employee, Vlad brought much-needed experience to the team, and together they built the MVP that exists on mainnet today.
Overview
Reality Cards is a prediction market unlike any other. Users do not bet on outcomes, they own them.
By owning the outcome, you own the NFT (non-fungible token) associated with it. For example, if you think Joe Biden will win the US election, instead of simply betting on Joe Biden, you will own the Joe Biden NFT.
There is only a single NFT associated with each outcome — so only one person can own it at a time. So if you own the Joe Biden outcome, you will be the only person in the world to do so. However, someone can take it off of you at any time. This is where the ‘always for sale’ mechanic comes in.
In brief: outcomes cannot be owned outright, they can only be rented. At any time, they are owned by whoever is willing to pay the highest rental price. If an outcome is owned, anyone can become the new owner simply by paying a new price that is at least 10% above what the current owner is paying.
Rental payments are not paid to the previous owner, instead, they create the pot for the event on which you are wagering. For example, in the market of who will win the US election, the daily rental payments from everyone owning the Trump, Biden, and third party outcomes are all combined into that same winning pot.
To avoid having to pay manually every day, Reality Cards allows users to make an initial deposit to cover future rental payments. Unused deposits (that is, deposit not yet used to fund rent) can be withdrawn at any time.
Now if someone does end up buying the outcome you already own, that doesn’t mean you lost a chance at owning a part of the outcome. The way Reality Cards rewards those who chose the correct outcome is by splitting the total pot to every user whoever held the winning outcome card, regardless of when they held it.
Your winnings are determined simply by how long you’ve held the winning outcome card. The pot is paid out to all owners of that card, in proportion to how long they’ve owned it.
Example
In this example, we’ll use the event “What will the price of COMP be at the end of July 2020 UTC?”.
In this example, the daily rental price to own the outcome that $COMP will be less than $200 is 2.75 DAI. The daily rental price that $COMP will be more than $200 is 2.5 DAI.
If you look above the two cards, you’ll see “Total rent collected:” which is currently 125 DAI. This is the rent that will be distributed to the holder(s) of the winning outcome.
The total rent collected will continue to grow until the event ends at the end of July. At the time of writing, $COMP is currently $165 — so if you think that there’s a good chance it stays below $200 it may be in your best interest to rent the “less than $200” Card.
For this example, we’re going to assume with confidence that $COMP will stay below $200, so let’s buy the card stating such. Now, in this example, we’re really confident, so we want to deposit enough to rent the card until the market resolves, or 15 days from now at the time of writing. In the current iteration, you must purchase a card for at least 10% over the current daily rental price — or in this case, 3.03 DAI a day.
Multiply that daily rental price and we’ll see we need a deposit of roughly 45 DAI to hold the card until resolution, assuming no one takes it off our hands.
After inputting our desired daily rental price and initial deposit, you’ll see that in this example if the event resolves in our favor, we’ll walk away with a 71% gain.
Now, if someone were to take the card off of us before it resolves, the money we deposited wouldn’t be taken from us. We can either withdraw any of the unused deposit, or let it sit just in case the person who bought it only has enough funds to rent the card for a few days, and it will default back to us at 3.03 DAI a day.
What’s Next?
Reality Cards‘s journey has only just begun. The MVP (phase 0) is currently live on mainnet with beta users already taking part.
Phase 1 is will be the first public release, and feature many UI/UX upgrades on top of what we’ve already seen in phase 0.
Phase 2 will allow any user to create their own event or market. On top of that, this phase brings the official governance token and liquidity mining.
This roadmap is subject to change. We will continue to keep our users updated on any future plans or changes.
Get Involved
Reality Cards is currently in private beta, however, if you’re interested in obtaining a beta key or have any questions— reach out to us on Discord!
- Discord: realitycards.io/discord
- Twitter: @RealityCards
- Website: realitycards.io
