The post Ethereum Co-Founder Warns Prediction Markets Are Sliding into “Corposlop” appeared on BitcoinEthereumNews.com.

Vitalik Buterin sparked a fresh debate in crypto circles today when he warned that prediction markets have wandered into a commercially successful but socially hollow groove. He also sketched out a radical alternative that would push them toward long-term hedging use cases, even suggesting they could reduce the need for fiat currency. Buterin began his thread by acknowledging the success of prediction markets. Volumes are large enough that trading can be a full-time job and markets often serve as useful complements to conventional news. But he quickly pivoted to a critique. In his view, many platforms have drifted toward short-term, dopamine-driven products, crypto price bets, sports wagers and similar offerings, because those things bring in big revenue, especially in a bear market. That incentive, he argued, encourages what he called “corposlop”: product choices driven by short-term revenue rather than social value. The core of Buterin’s prescription is to reposition prediction markets around hedging. He laid out a simple taxonomy of market participants, “smart traders” who provide information and profit, and the actors who, by design or necessity, lose money. Today, he said, the losers tend to be “naive traders” who bet on plainly bad ideas. That dynamic gives platforms a perverse incentive to court more such bettors and to cultivate communities that reward noise, not insight. Vital Shift Wanted Buterin contrasted that with two other categories he finds more promising. One is “info buyers,” entities that set up money-losing automated market makers to elicit trades that teach them information they lack. The other is “hedgers”: actors who accept expected losses in linear terms because the market serves as insurance, smoothing their overall risk exposure. He used a biotech example to explain the hedger’s logic. By betting on an electoral outcome that would otherwise hurt the value of a biotech holding,…

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Filed under: News - @ February 14, 2026 6:26 pm