The problem Predicto (Prediction + Crypto) solves

Prediction markets are a vehicle for aggregating relevant information about the expected outcome of a future event. The prediction market's outcome share price reflects the probability of a future event to occur and quickly incorporates new information.

While it’s not possible to stop the future from changing, prediction markets give us the next best alternative: the ability to predict the ever-changing future.

Prediction markets offer financial incentives to correctly predict the outcome of future events. Participants who predicted correctly will make a guaranteed profit, while those who are mistaken incur a loss. Hence, only those with superior or expert
knowledge are incentivized to participate in the market.

Doing it all using the Automated market maker on tezos smart contract instead of old order book market making is very necessary for prediction markets in general. AMM helps to supply outcomes shares in even low liquidity. Also, the maths and the logic of price calculation and trading cannot be altered because all of it is written and executed on tezos smart contract which makes it immutable.

Challenges I ran into

The biggest challenge was to figure out the maths behind the AMM of a prediction market because it is different from a regular AMM because here 3 tokens are involved (1 collateral token, 2 outcome tokens) instead of 2. And there was almost no information about it on the web. Figuring out all the maths behind the trading of outcome tokens, adding liquidity, removing liquidity, and implementing it in a smartPy smart contract was quite a challenge. I studied other AMM-based prediction markets on other blockchains to get the idea of the maths and after a lot of effort and time I was able to figure out the logic behind all functionalities. Apart from this project workflow was very smooth.