Exploring a Unique Prediction Market
Would you place a bet that COVID-19 originated in a laboratory? Or that some images from the Apollo 11 moon landing were actually filmed on Earth? Verifact Markets, a new startup that describes itself as a “prediction market for controversial facts,” offers a rather unusual proposition: instead of speculating on future events, why not wager on occurrences that have already taken place?
Upon its launch, Verifact Markets presented operators with a range of initial topics to stake their claims on, including whether Jeffrey Epstein died by suicide and if State Farm, a major insurance company, “intentionally delayed” claims related to the 2025 Los Angeles wildfires. The featured market during the beta phase focused on the origins of COVID-19, which remains active, with bets currently placed at 58 cents on “true” and 48 cents on “false.” A significant number of participants have wagered that the pandemic originated from the Wuhan Institute of Virology in China.
Funded by Positron Capital Management, the investment firm of tech investor Peter Wokwicz, Verifact Markets is seen as a means to settle debates on contentious issues, such as the energy consumption of AI data centres. Wokwicz expresses his enthusiasm, stating, “I’m excited because no one has done this before. We will not shy away from controversial markets.”
Understanding Conventional Prediction Markets
In a typical prediction market, participants purchase financial instruments known as “event contracts,” which are based on whether a specific event will occur in the future. Topics can range from which team will win the Super Bowl to the price of Bitcoin in the next 15 minutes, or whether the United States and Iran will reach a nuclear agreement. For instance, someone buying a “yes” contract on Polymarket that the Bears will start Case Keenum next week stands to profit if that occurs. Conversely, a “no” bet on Kalshi regarding rain in Miami tomorrow would result in a loss if a downpour ensues.
Each prediction market operates under its own set of rules for resolving events, and complexities can arise, such as when users on Polymarket debated whether Ukrainian leader Volodymyr Zelensky was indeed wearing a suit, or when Kalshi traders protested the platform’s resolution of a market concerning whether Iran’s Supreme Leader would step down.
Verifact Markets: A Complex Structure
Verifact Markets takes this complexity a step further by concentrating specifically on situations where there is disagreement about past events. It provides markets for “controversial” occurrences, allowing users to bet on whether they are “true” or “false.” Participants can also submit “evidence” for or against their stance, with plans to reward reliable documentation that helps resolve markets. If Verifact determines there is sufficient evidence for a decision, it will act accordingly. Should it remain unable to reach a conclusion, the company will “expire” a market and pay users based on the odds calculated at that time.
According to Rodrigo Aquino, CEO and co-founder of Verifact Markets, the markets themselves will not determine the truth of an event. This means that even if all customers in a specific market vote “true,” it does not necessarily validate that claim. Trading prices will be considered alongside other evidence and documentation submitted to the company. Plans are also in place to launch its own research system, which Aquino describes as “patent-pending.” When asked how this system operates, he replied, “We are analysing a multitude of data points in a multidimensional way,” adding that the process is “very mathematical, very quantitative,” and notably, “very secretive.”
The Quest for Truth in Controversial Events
When I pointed out that credibly determining the origin of the COVID-19 pandemic would be a groundbreaking revelation, solving a mystery that has eluded scientists for years, Aquino remained optimistic. “It’s feasible,” he affirmed.
Currently, Verifact is in discussions with market creators to provide liquidity. The project is still small enough that it is being financed through self-funding by Positron Capital Management. In the United States, several lawsuits are ongoing regarding whether prediction markets should be classified as financial instruments or gambling, making it challenging to discern how Verifact would fit into that debate, given its unique business model.
Limited Availability and Future Plans
At present, the company is only offering its markets to individuals outside the United States while seeking the most viable legal path domestically, as it is not a licensed exchange in the country. However, Wokwicz has mentioned that he acquired a regulated financial exchange last year and intends to integrate Verifact into it when possible. Similar to Polymarket’s decentralised product, Verifact Markets operates on blockchain technology, allowing participants to trade using stablecoins.
Verifact Markets is part of a wave of startups aiming to clarify facts surrounding controversial news and historical events. A recent addition was the short-lived project Objection, funded by Peter Thiel and later rebranded as The Primary, which aimed to determine the veracity of certain news stories. However, before its truth verification efforts could gain momentum, The Primary shifted focus to news publishing and a scoring system to rate journalists.
The Ambitious Challenge of Verifact Markets
Currently, there are very few details on how Verifact Markets will ultimately ascertain whether something is true or false, despite the fact that its entire value proposition hinges on its unique ability to do so. This represents an extremely ambitious task, further complicated by numerous unresolved aspects, such as how the project will generate revenue, as it does not plan to charge fees at launch. Wokwicz is not overly concerned with such matters at this stage.
“What excites me the most are some of the unique pieces of evidence that people will uncover. We are going to bring the truth to light: what is true and what is false,” he states.
Some veterans of prediction markets express intrigue regarding Verifact Markets, despite the many unanswered questions about its operational model. “I will join just to keep profiting from the 2020 elections for the rest of my life,” remarks Caleb Davies, a prominent trader in the prediction market space.