Vitalik criticizes the prediction market as a "corporate junk casino," and proposes the idea: AI hedging replacing fiat currency

Ethereum co-founder Vitalik Buterin posted a lengthy article on X platform, openly predicting that the market is sliding toward “corposlop,” an overemphasis on short-term crypto price bets and sports betting—products that offer only dopamine value without any social informational value. He proposed an alternative: transforming prediction markets into general “hedging” tools.
(Background recap: Ethereum Foundation co-CEO announced stepping down; Vitalik warmly thanked Tomasz: “Within a year, Tomasz has transformed EF.”)
(Additional context: Ethereum core contributor Greg revealed that Tomasz was marginalized in pushing reforms at EF, while Aya’s influence remains.)

Table of Contents

• Which of the three types of losers can sustain the market?
• The sustainability of hedging
• The most radical idea: replacing fiat with prediction markets
• The premise: assets used for valuation must generate returns

Today, Vitalik Buterin expressed on X that he has recently become concerned about the development direction of prediction markets. He acknowledged that prediction markets have achieved a certain level of success: high trading volume enough for full-time traders and often serving as a useful supplement to news media.

However, problems have also emerged. He pointed out that prediction market platforms “seem to be overly converging toward an unhealthy product-market fit”: embracing short-term crypto price bets, sports betting, and other “dopamine-only, no long-term fulfillment or social informational value” products.

Vitalik speculates that teams are compromising in these directions because everyone needs revenue during bear markets. He admits understanding this motivation but warns that this path ultimately leads to “corposlop,” a term for products sacrificed for short-term profits at the expense of long-term value.

Recently I have been starting to worry about the state of prediction markets, in their current form. They have achieved a certain level of success: market volume is high enough to make meaningful bets and have a full-time job as a trader, and they often prove useful as a…
— vitalik.eth (@VitalikButerin) February 14, 2026

Which of the three types of losers can sustain the market?

Vitalik breaks down the basic structure of prediction markets, which require two roles: one providing information and earning profits (“smart traders”), and the inevitable “losers.” The key question is: who is willing to keep losing money and keep coming back?

He summarizes three roles:

First is the “naive trader”—those holding false beliefs and betting far from reality. Vitalik admits that profiting from these people isn’t fundamentally immoral, “but over-reliance on this group carries a certain ‘curse’.” Because it drives platforms to actively seek more “stupid viewpoint holders” and foster a brand culture that encourages foolishness. He straightforwardly states this is how prediction markets slide into “corposlop.”

Second are the “information buyers”—they build automated market makers destined to lose money, incentivizing trading to extract market info. This has been the idealistic vision of Robin Hanson and others, but faces the public goods dilemma: the info paid for is accessible for free worldwide. Except in certain scenarios (like prediction markets for decision-making), this strategy’s trading volume remains quite limited.

Third are the “hedgers”—they are expected to lose on linear expectation but use the market as insurance to reduce overall risk. Vitalik believes this is the truly sustainable direction for prediction markets.

The sustainability of hedging

Vitalik illustrates the value of hedging with a concrete math example. Suppose you hold shares in a biotech company, and it’s known that “Purple Party” is more favorable to biotech than “Yellow Party.”

If Purple wins, the stock price fluctuates randomly between $80 and $120; if Yellow wins, it’s between $60 and $100. By betting $10 on the prediction market that Yellow will win, regardless of the outcome, your overall payoff is leveled between $70 and $110.

Using a logarithmic utility model, this risk reduction value is about $0.58—seemingly small, but as the position size grows, the benefit of hedging becomes significant.

The most radical idea: replacing fiat with prediction markets

Vitalik further proposes his most disruptive idea. He questions what stablecoin holders really want: “price stability” to ensure future expenses. But if the crypto ecosystem is built on dollar-pegged stablecoins, then crypto isn’t truly decentralized.

Moreover, different people have different expenditure structures. Many teams have tried to create ideal stablecoins based on a “decentralized global price index,” but Vitalik believes the real solution might go even further—“completely abandoning the concept of currency.”

His blueprint involves creating price indices for all major goods and services (treating different regional physical goods and services as separate categories), and establishing prediction markets for each category. Every user—individual or enterprise—runs a local LLM (large language model) that understands their consumption patterns and provides a “personalized prediction market share basket,” representing “the user’s expected expenditure over the next N days.”

Vitalik states:

In this way, we don’t need fiat at all. People can hold stocks, ETH, or any assets to accumulate wealth, and when stability is needed, they hold a personalized prediction market share.

The premise: assets used for valuation must generate returns

Vitalik also emphasizes the key prerequisite for realizing this vision: prediction markets must be priced in “assets people are willing to hold,” such as interest-bearing stablecoins, wrapped stocks, or ETH.

Non-interest-bearing fiat has too high an opportunity cost, which would outweigh the value of hedging. But if this hurdle can be crossed, the entire system would be “much more sustainable” than the current state: because both trading parties can derive long-term satisfaction from the products, and substantial mature capital would be willing to participate.

The arguments Vitalik presents reflect his extended view of a pluralistic economy—an approach quite radical. In a model without fiat currency, lacking fiat liquidity, all assets are valued relative to each other.

Further reading: Illustration of the Multiverse — What is Plurality, promoted by Vitalik and Glen? Why is collaborative technology a key to human societal progress?