Futarchy: Governance by Prediction Markets

Vote on Values, Bet on Beliefs

Futarchy is a governance idea, proposed by economist Robin Hanson, that uses prediction markets to make decisions. The slogan is 'vote on values, bet on beliefs.' A community first decides what it wants to optimise (a metric that captures its values — say, the token price, protocol revenue, or a defined welfare measure). Then, for any proposed decision, prediction markets estimate whether that decision would make the chosen metric go up or down. If the market predicts a proposal would improve the metric, it is adopted; if not, it is rejected. The logic is to let markets, which aggregate information and put money behind beliefs, decide which policies are actually expected to work.

Why It Is Intriguing for Crypto

Crypto governance struggles with uninformed voting, apathy, and plutocracy. Futarchy's pitch is that betting markets force participants to put money behind their predictions, rewarding those who are actually right and aggregating dispersed information into a price signal about what will work. Instead of voting for what sounds good, decisions follow what the market expects to genuinely improve the agreed metric. Crypto is a natural testbed because prediction markets, tokens, and measurable on-chain metrics all exist natively, and projects (notably in the MetaDAO ecosystem on Solana) have run real futarchy-based governance experiments.

• Futarchy: decide values by voting, decide policies by prediction markets
• Markets estimate whether a proposal would improve the chosen metric
• Proposals predicted to improve the metric are adopted; others rejected
• Crypto (e.g. MetaDAO) has run real futarchy governance experiments