Flux protocol is a public permissionless development protocol for building the future of open-markets. Created on the distributed infrastructure of the NEAR Ecosystem, Flux offers developers the opportunity to quickly and easily build next-generation open-market solutions in a decentralized, scalable, and secure manner.
As a public protocol, developers have the opportunity to build solutions on Flux using open-source Software Developer Kits (SDKs), the Flux Open-Source App, Automatic Market Mirrors, as well as the Flux Oracle: In short, all the tools a market creator would need to create an efficient, cheap, and scalable market from any future data source.
Connect with the Flux Oracle: To pull data from existing markets or data repositories.
Integrate with the Flux Orderbook: To set up a market on Flux Protocol, and for Flux users to interact with.
Liquidity from Flux Automated Market Maker: To have a foundation for scaling a particular market.
Easily accessible from any new or existing App: To integrate your market into existing or future applications.
Create Your Market!
Creating a market on Flux is quick and easy to do, if you already know what kind of an open-market you would like to create. On Flux, three types of markets can be created:
First: Binary Markets – where questions can have a total of two possible outcomes, most often formed in terms of ‘Yes’ or ’No’: Will the Federal Reserve Lower Interest Rates on October 15th?
Second: Categorical Markets – where questions can have multiple different outcomes specific to a particular question or circumstance: Who will win the Super Bowl in 2021? Team A, Team B, Team C, Team D…. Team N
Third: Scalar Markets – where questions have a total of two possible outcomes, but where value is allocated in proportion to the position taken. Traders have the opportunity to go long or short in a range of values set within clear parameters of question.
Why Build On Flux Now?
Flux revolutionizes open-markets in three primary ways:
Permission: Any USER and Any DEVELOPER can Participate in ANY Open Market.
Decentralization: No sole owner of the protocol has the capacity to close or ban an open-market. The design of the protocol is such that markets can operate independently of a central authority.
Cheap and Scalable: Because Flux is built on NEAR protocol, it is extremely cost-effective and easy to use: Transactions cost less than one cent, with up to 80,000 transactions capable of being processed per second, and resolution times set between 30 minutes and 24 hours depending on the specific market.
As such, the technical design of Flux Protocol is such that as more projects build on Flux, more users will accrue to the platform. In this manner, Flux will continue to grow over time as its competitive advantages attract increasing numbers of developers, entrepreneurs, and users.
At its current state of development, Flux protocol presents a rare opportunity for prospective developers: An open frontier of possible markets to create, support and funding from the Flux Team via the Flux Beta Program, and a complete set of tools to start building a specific vertical, market monitor, or user-application. With public interest in open-markets and open-finance on the rise, Flux Protocol offers a unique opportunity for building a decentralized, scalable, and cost-effective future in such markets.
Flux is a fast growing open-prediction market protocol built on NEAR. In essence, Flux is a platform for developers and market creators to offer decentralized prediction services relating to both digital and real-world events. Whether the services offered are in the form of a betting platform, a forecasting event, a data marketplace for insurance data, or a market for weather derivatives, Flux is built to scalably manage between 100 and 80,000 transactions per second, at a cost of less than $0.01 cents per transaction!
At the center of the Flux Ecosystem, is the Flux Token – $FLUX. Like any other cryptocurrency based protocol, the Flux Crypto-Economic model is important in understanding the full scope of opportunities presented by the Flux Ecosystem. As a general primer on Flux tokens, this blog focuses on outlining not only what Flux tokens can be used for, but also why that is important in the context of emerging prediction markets on the Open Web.
Name: Flux Token
Total Supply: 1,000,000,000 tokens
As a utility token on the NEAR platform, FLUX is used for five primary purposes:
(1) Resolution of Market Outcomes
(2) Market Validity Bonds
(3) Dispute Bonds
(4) Fee Setting and Governance
Resolution refers to the role of validators in ‘resolving’ market outcomes honestly. FLUX must be staked by a validator in order to receive ‘vote tickets’. Vote tickets in turn are used to resolve market outcomes and earn nDAI for their initial resolution activity. According to basic validator dynamics more FLUX must be staked by a given validator, in order for that validator to have more resolution capacity (i.e. more votes on more markets). At scale, this means that a significant portion of all FLUX in circulation will be locked up in pursuit of ‘resolution’ rewards.
Market Validity Bonds
In order to create a new market, a market validity bond must be posted by the market creator. Flux tokens are the currency used by a market creator to post this bond. Ideally, if the market is a valid market – meaning the outcome stemming from trades is acceptable, then the market creator will recover these tokens. However, in the event that the market is invalid – meaning there is no valid outcome from the potential trade, then the posted bond will be distributed to the validators responsible for validating that market. As a bond, the Flux Token is used as collateral for every and any market that is created on Flux.
Note: While Market Validity Bonds must be posted in Flux, the Market Creation Fee is paid in DAI.
Disputes arise when market resolutions are contested by one or more of the market participants. In the event of a dispute, the disputing party must use FLUX to post a bond for the dispute being made. This bond will increase in cost proportional to the number of validators required to validate the market. In the event that the dispute is accepted, then their bond is returned to them. In the event that the dispute is denied, then their bond is confiscated by the validators involved in resolving the dispute. Once again, FLUX token is used as collateral for every and any market on Flux in which a dispute must be resolved.
Fee Setting / Governance
Governance of Flux protocol is performed by Flux Token holders. Collaboratively, these token holders vote on the adjustments of key constants for different activities that can be performed on Flux. These constants are crucial in determining:
The Fee for Creating a Market
Market Creation Costs
Cost of the Market Validity Bond
The number of tokens required to become a validator
$FLUX is also used to denominate the value captured from open-interest locked in escrow. In simple terms, all markets denominate nDAI on Flux. This nDAI can be swapped into CDAI or DAI Savings automatically. Revenue via interest can thus be generated from nDAI in escrow, which, in turn, is claimed in the form of Flux tokens.
What Flux Tokens Are Not Used For:
Importantly, there are a couple of activities on the Flux platform that are not denominated through the Flux Token.
Trading in open marketplaces is all done in nDAI. This is to ensure stability in the value offered in the market.
All Market Creator Fees are paid in nDAI so as to ensure consistent and low creation costs.
Rewards to validators for the correct resolution of markets is also paid in nDAI.
Connecting the Dots:
The Flux Token is the fundamental value imbued into the creation, management, and validation of markets on Flux Protocol. As Flux protocol grows, demand for the Flux token will naturally increase, as more Flux will be required for different market activities. In context, the total available market (TAM) that Flux is disrupting is estimated to be valued at close to $12 trillion dollars. However, because Flux Protocol offers open-market access of any valid market to any participant, it is likely that the total market size will increase over time, as 1) New participants are able to access open-markets through Flux, and 2) New Open Markets can be created by enterprises and other stakeholders who have previously not participated in prediction markets before. As this process unfolds, it is important to remember that there will never be more than 1 billion Flux tokens available, with a sizable portion of those tokens either locked up among validators or used for liquidity purposes.
The Crypto-Economic design is thorough, insofar as Flux will remain in high demand for creating and validating markets, while the markets themselves will operate in nDAI. As such, the risk of volatility for prospective market participants is non-existent, while incentives for ensuring the infrastructure of the protocol remain high.
Flux is an Open-Market Protocol that has been in the works for the last 18 months. As the first project to launch on the NEAR Blockchain, there are a number of unique advantages of the Flux platform as a truly decentralized, user-friendly, scalable, and secure protocol for the future of open markets, decentralized finance, and data-driven applications.
Flux Has Launched: We Hope You Are Ready.
What is Flux? Understanding in Context
Flux challenges existing prediction markets, while also pioneering the future of decentralized finance (DeFi). On Flux, an ecosystem of stakeholders maintains the creation, resolution, disputation, and conclusion of data-based marketplaces connected to events and people in the real world. As a decentralized protocol, Flux offers any individual, developer, enterprise, and entrepreneur the unique opportunity of building a decentralized application, opening up a new prediction market, trading on existing prediction markets, or participating as a validator in resolving market outcomes in exchange for rewards.
There are two separate trends that Flux launches on the forefront of:
The continued rise and existing dominance of internet-based prediction markets.
The Emergence of Decentralized Finance in the Cryptocurrency Industry.
Internet Based Prediction Markets:
Internet based prediction markets, also known as ‘decision markets’ refer to online platforms from which any individual can set a price on the realization of a future event. Extensive in scope, these markets encompass well-known recreational activities – from sports betting, to predicting the next viral meme – to more advanced predictions from economists and macro traders on future events including black swans, pandemics, revolutions, and military events. As Slate explains, even DARPA has been interested in the development of these markets for national security purposes:
For the average user or trader, a prediction market is an opportunity to make a profit off of the behavior of an event or asset. Today, the Total Addressable Market (TAM) for prediction markets is valued at close to $12.3 TRILLION Dollars. Here are the primary verticals where they currently stack up:
Betting: With a value close to $53.7 billion dollars.
E-Sports: With a value close to $14 billion dollars and rising.
Global Futures Markets: Estimated value of $12.1 Trillion across a multitude of Assets.
Social Markets: With a value close to $43 Billion dollars.
Sports Markets: With an addressable value of roughly $104 billion dollars.
To date, these markets are highly centralized: Gatekeepers, in the form of exchanges, online betting platforms, or applications have complete control over what markets are offered to users as well as which bets can be made. These same centralized platforms also have the capacity to charge transaction rates for each bet, at a price of their choosing.
Emerging Markets: DeFi and Superforcasting
While existing prediction markets are highly popular, two of the most notable emerging trends in both fintech and decision markets include Decentralized Finance (DeFi) as well as Superforcasting. Both are important contextual markers for understanding the full potential of Flux.
The Rise of Decentralized Finance (DeFi):
Decentralized finance, as written by Forbes’ Jeff Kauflin refers to “the notion that crypto entrepreneurs can recreate traditional financial instruments in a decentralized architecture, outside of companies’ and governments’ control.” In its current form, DeFi plays are primarily built around marketplaces for decentralized lending, assets, exchanges, and derivatives.
For Flux Markets, assets and derivatives are especially relevant: As Defirate writes, the traditionally centralized markets for these products are some of the largest markets in the world (in the Trillions of dollars for derivates), while the decentralized replica’s remain extremely underdeveloped and small:
“The traditional derivatives space is absolutely massive. We’re talking hundreds of trillions or even quadrillions of dollars in market size. DeFi-based derivatives are nowhere near this size and given the potential size in the existing market, there is a substantial amount of room for this sector to grow. As such, derivatives from projects such as Synthetix and Augur have only aggregated $49M in TVL as of writing in September 2019.”
As such, the potential market that Flux intends to disrupt is perfectly positioned for innovation.
Less well known, yet still increasingly relevant, is a more analytical and professional niche of decision markets known as ‘Superforcasting’. Pioneered by Dr. Philip Tetlock from the University of Pennsylvania. In essence, what companies like The Good Judgement Projectdemonstrate, is that there is also professional interest – from large corporations, to government agencies like DARPA, in the usage and monitoring of decision marketplaces. These practices, largely based on probability and statistics, is an emerging industry for policymakers, entrepreneurs, and military organizations.
The Flux Revolution:
In the early days of prediction markets, Flux is positioned as an all-encompassing, decentralized platform, at the forefront of both existing and emerging prediction marketplaces. From E-Sports Betting, to Superforcasting black swan events, to using the Flux Platform for decentralized insurance applications, there is no doubt that Flux is building the future of open markets.
Importantly, there are a number of additional features that Flux incorporates that make it entrenched for the long term:
Flux is building on NEAR Protocol. Flux is the first project launching in the NEAR Ecosystem. That is important for a couple of reasons: Flux is going to be supported by the NEAR Foundation and the community at NEAR. NEAR is debatably one of the most robust blockchain ecosystems to date, in large part due to Nightshade and dynamic sharding. In addition, the NEAR ← → ETH Rainbow bridge recently launched, meaning assets, data, and cross-chain calls can be integrated into Flux from Ethereum.
Flux is Launching With A Selection of Live Products and Tools: The Flux SDK, the Flux App, and the Flux Oracle, are all essential components that help the ecosystem hit the ground running. Additional tooling and incentives, including the Flux Automated Market Mirror, as well as Flux Mechanics, the Flux Beta Program and Flux Liquidity Incentives all provide structure and easy access to prospective developers and liquidity providers. In short: The platform can run at full speed upon launch.
dApps are Already Building on Flux: To date, 10 teams are already building the future of prediction markets on Flux. While the details of each project will be released in time, it is known that these projects range from E-Sports Betting, to Prediction Exchanges, to News Derivatives, to Social Sports Betting. In essence, a small flow of early adopters ahead of the trillions of dollars looking for cheap and accessible markets in the future! As a beginning, the experiences and success of these teams, will largely affect the speed of development upon the platform.
No Competitor is Remotely Comparable To Flux: Across the three most important criteria for any open market, Flux dominates the competition: The Flux platform can handle between 100 – 80,000 transactions per second, with a minimum resolution time of 30 minutes, and cost per transaction of less than $0.01 cent.
The Time To Get Involved in Flux is Now:
Flux is in its early stages of development. Interested developers, entrepreneurs, and validators can begin their journey with Flux Protocol by Signing Up for the Flux Social Incentives Program. As markets mature, and the decentralized web continues to grow, there is little doubt that Flux will remain on the cutting edge of decision markets and the innovative applications built therein.
About 4NTS: 4NTS Guild is a rising NEAR Guild focused on connecting and communicating NEAR, its different projects, and the tremendous opportunity for entrepreneurs, contributors and other Guilds. Feel free to drop us a line at m@4NTS.com