PancakeSwap, a cross-chain decentralized exchange (DEX), has partnered with Allora Network to launch an artificial intelligence (AI)-powered prediction market on Arbitrum.
The new prediction market will feature AI-driven price feed data from PancakeSwap’s new decentralized AI network partner, Allora.
Using Allora’s machine learning capabilities, PancakeSwap users can predict price movements of Ethereum (ETH) on Arbitrum (ARB).
In an interview with Cointelegraph, Chef Gyoza, Product Manager at PancakeSwap, explained the decision to collaborate with Allora:
“Over the past three years, models built by the Allora Labs (formerly Upshot) team have efficiently produced price predictions for over 400 million assets with a 95-99% confidence level for most accurate forecasts.”
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How it works
Allora’s AI-powered price prediction models will predict the likelihood of rising or falling prices of various crypto assets, which users can then forecast for or against.
The payment process is guided by AI accuracy and is adjusted over time based on AI performance as users make predictions in the prediction market.
Gyoza summed up the new prediction market by saying:
“PancakeSwap users will be able to follow or go against AI predictions. Since the AI performs well and scores in our tests with an accuracy close to 65%, users will have to choose the right moment to oppose the AI, which will naturally have higher chances.
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Prevent exploitation
Regarding potential market manipulation and users exploiting the new Prediction Market feature, Gyoza added:
“Users can track the full history, price feed history, and AI forecast history via the History tab on the forecast page. All results are also settled on-chain via our prediction contract v2.
The AI prediction is only issued once the towers are locked, preventing manipulation “because users do not express directional positions,” Gyoza explained.
As a new market feature, Gyoza expressed PancakeSwap’s opinion on the impact the prediction market can have on the platform’s liquidity and volatility:
“At the moment we don’t think this will have a major impact on the market as it is still an emerging product. However, we believe that with Allora as a partner, we can expand our prospects to many other markets, both on-chain and off-chain.
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PancakeSwap turns to artificial intelligence
PancakeSwap recently announced that it is preparing to launch CupcakeHop, an AI-powered portfolio management tool developed by Bril Finance.
This new tool, scheduled to launch in August, is designed to bring personalized investment strategies and real-time risk management to a wider audience.
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