# @vitalik.eth: Prediction markets need interest payments to unlock hedging

Source: https://farcaster.xyz/vitalik.eth/0x3ee24213
Kiwi News: https://news.kiwistand.com/stories/vitaliketh-Prediction-markets-need-interest-payments-to-unlock-hedging?index=0x68ab7fd0c0ecc411492144e845acf9dd713cf8642f0fd2036c8adbb11419b351efb01338
Submitted by misha on 2025-08-24 UTC, 3 upvotes, 0 comments

## Summary

Vitalik Buterin argues that prediction markets need to pay interest before hedging use cases can open up. He says major prediction markets currently mostly don't pay interest, which makes them unappealing for hedging because participating means giving up a guaranteed 4% APY on the dollar. He expects hedging use cases and trading volumes to grow once this is solved.

## Article

Debate on whether prediction markets are good or bad.

One major point I will add is that right now the major markets mostly don't pay interest, which makes them very unappealing for hedging because to participate at all you sacrifice a guaranteed 4% APY on the dollar.

I expect lots of hedging use cases to open up once that gets solved and volumes increase more.

https://docs.google.com/document/d/1jc_46jk6UEdDY7Dc3hoX0gkTAyXAE07sjV93jPbrU40/mobilebasic