TL;DR
Starting a prediction market on which projects will be approved in the upcoming ZEC retroactive grant round through the review period (August 17th to September 16th) and ending before commencement of coinholder poll (September 17th). Markets would resolve upon announcement of results (voting end scheduled for September 29th).
The Market: Will [Project] be approved in the Q3 2026 Coinholder-Directed Retroactive Grants poll?
The Ask: Feedback from voters on whether such a market would be a useful signal for their decision making; interest from ZEC community on their participation through trading in such a market
Introduction
During Octant Epoch 12, Seer ran a market forecasting the percentage of funding each project would receive and resolved it against the round’s actual outcome. This had the useful feature of producing 2 sets of allocations, one from the actual round and another from market estimates on how that round should resolve.
When a market misprices a project, a trader can profit by betting against the error, and that profit incentive is what drags the price toward the truth. Although truth in this case means the market is simply predicting coinholder behavior & not necessarily the project’s objective utility or how the round “should” resolve
Market Structure
In the last retro funding round, 55% of project proposals were approved by ZEC holders for retroactive funding.
This would serve as the base rate for the prediction market: every project applicant starts with a price of 0.55, which moves up or down based on the wisdom of traders in the market. If a project does get approved, it converts to 1; else it resolves to 0.
Proposed market rules
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One binary Yes/No market will be created for each proposal appearing in the final Q3 ballot.
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Markets open during the review period and close on September 16 at 20:00 UTC, before the coinholder poll begins.
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Yes: Official results identify the proposal as approved.
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No: proposal is rejected, including failure to meet the participation threshold.
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Subsequent payment delays, KYC requirements, keyholder actions, or changes in the USD/ZEC exchange rate do not affect resolution.
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A withdrawn proposal, a proposal omitted from the final ballot, or a proposal that can no longer be mapped unambiguously to a ballot item resolves as Invalid.
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If the poll is postponed, trading remains closed and resolution waits for the rescheduled official result. If the round is cancelled, markets resolve as Invalid and issue refund to all traders
We will publish a post-round report comparing the final market probabilities with the uniform 55% baseline using Brier score and log loss. We will also report participation, unique trading addresses, volume, liquidity, spreads, and price concentration. The dataset and methodology will be made public where possible.
Benefits
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Added signal to voters in the round, who may look at market estimates as a triaging tool for order in which to review projects before the round. Especially useful as the number of projects applying has been increasing, with 37 for review this time around.
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Increased participation in the Zcash funding program from not just voters but also the trading or data scientists that get rewarded for correctly estimating the utility of a project to the ecosystem
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A counterfactual forecasting dataset that can be compared with the eventual voting results. The market estimating low odds for a projects approval but it nonetheless getting approved (or vice versa) provide good leads to probe the mechanism.
During a recent voting round, Teku was thought to be too high (17%) which was caught as both the market and the winning model with least error score to committee results predicted a much lower amount. The winning model may also be used in the future as an eligibility check in case number of applicants grows too large.
During the coinholder poll (September 17–29), you’d open the market and see each submitted project with a final, pre-poll price next to it - the market’s final estimate of its approval chances.
The same underlying mechanism has beaten conventional baselines repeatedly: in Kleros Foresight, markets on Seer predicted an expert judge’s ranking of films in exact order before they had watched a single one, beating both the algorithm and every human baseline. The pattern is consistent, when anonymous traders are financially rewarded for being right, they price judgment more accurately than any single expert.
Drawbacks
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Coinvoters may simply default to market weights before casting votes, or view those with a higher price in the market more favorably.
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As base rates begin equally for all projects, some amount would be lost from the liquidity pool assuming traders move the market in a more accurate direction. We have also found it useful to give traders a subsidy to participate in the market. Seer will fully fund this pilot and any request for community funding would be made separately and not be assumed from participation in this experiment.
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Projects participating in the round may spend their own money to buy shares in the prediction market to move the price higher. The strategy may also work if there is insufficient trading volume or counter traders / arbitrageurs.
Timeline
| Column 1 | Column 2 |
|---|---|
| Date | Action |
| 15th - 20th August | Forum Post feedback |
| 20th August - September 16th | Trading Opens |
| September 16th -29th | Trading Closes, Market Review Open |
| September 30th | Market Resolution, P&L to Traders |
Conclusion
We solicit 3 points of inquiry from the Zcash community before the market goes live over the weekends;
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Is the proposed resolution language consistent with the official voting rules?
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Would final pre-poll probabilities help voters in their review of proposals?
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Would community members participate as traders during the review period?
We look forward to running the experiment and getting some empirical data on the above questions.