PancakeSwap Launches AI-powered Prediction Market on Arbitrum

PancakeSwap’s AI-powered market now enables Arbitrum users to forecast Ether price fluctuations, utilizing Allora’s machine-learning data to ensure precision

PancakeSwap, a multichain decentralized exchange (DEX), has partnered with Allora Network to introduce a prediction market on Arbitrum fueled by artificial intelligence (AI).

Sourced through Allora, the new prediction market will include AI-driven price input data.

The machine-learning capabilities of Allora enable PancakeSwap users to anticipate the price movements of Ether (ETH) on Arbitrum, which amounts to $3,383.

Chef Gyoza, the product manager at PancakeSwap, explained the decision to collaborate with Allora in an interview with Cointelegraph:

“Over the last three years, models built by the Allora Labs team (formerly known as Upshot) have effectively produced price predictions for more than 400 million assets with a 95–99% confidence for the most accurate predictions.”

Mechanism of operation

Users can utilize Allora’s AI price prediction models to assist in their trading decisions by predicting the probability of the price of various crypto assets increasing or decreasing.

The AI’s accuracy guides the payout process, which adjusts over time based on the AI’s performance as users make predictions on the prediction market.

Gyoza provided a concise summary of the new prediction market, stating:

“PancakeSwap users will be able to follow or oppose the AI’s prediction. With the AI’s performance and record in our tests achieving close to 65% accuracy, users will have to choose when to oppose the AI, which will naturally have higher odds.”

Preventing exploitation
Gyoza elaborated on the potential for market manipulation and the potential for users to leverage the new prediction market feature:

“Users can track all round history, price feed history, and AI prediction history via a history tab on the prediction page. All results are also settled onchain via our prediction v2 contract.”

Gyoza clarified that the AI prediction is only issued after locked rounds, which prevents manipulation because users do not articulate directional positions.

Gyoza expressed PancakeSwap’s perspective on the potential impact of the prediction market on liquidity and volatility on the platform as a new market feature:

“At the moment, we don’t think that it’ll influence the market to a large extent, as it’s still a nascent product. However, we believe that with Allora as a partner, we can expand the predictions to many other markets, both on and offchain.”

PancakeSwap implements artificial intelligence.
PancakeSwap has recently disclosed that it is in the process of introducing CupcakeHop, an AI-powered portfolio management tool that was created by Bril Finance.

This innovative instrument, scheduled to be introduced in August, is intended to provide a broader audience with personalized investment strategies and real-time risk management.