Contro is a prediction market built in collaboration with Initia, which recently closed Series A funding round. | Credit: Mario Tama / Getty Images.
Key Takeaways
- Initia recently closed a $14 million funding round led by Theory Ventures.
- Initia-based projects include Contro, a new DeFi protocol that could transform the way prediction markets work.
- Decentralized prediction markets have garnered attention recently thanks to rising activity on Polymarket.
In recent months, a wave of election betting and surging volumes on Polymarket have thrown decentralized prediction markets into the spotlight. But Polymarket isn’t the only horse in town.
Newcomer Contro, built in collaboration with Initia, recently closed Series A funding round led by Theory Ventures. To power its new system, Contro has built a dedicated Layer 2 with Initia, a rollup development platform that aims to enhance cross-chain interoperability.
How Do Prediction Markets Work?
A prediction market is a market for trading contracts that pay based on the outcomes of unknown future events.
As well as platforms like Polymarket that mostly focus on political and sporting events, platforms for trading futures and options contracts can also be thought of as prediction markets.
While there are many different prediction market designs, accessing information faster than the rest of the market is always an advantage.
Contro’s Alternative Approach
This is where the Contro protocol claims to be different. Unlike previous models, which give a massive advantage to traders who learn information first, Contro’s gradual limit order book is designed to make prediction markets less prone to instant inside information snipes. This, in theory, helps to mitigate the impact of high-frequency traders, MEV bots, oracle manipulators, and other actors that create inefficiencies in traditional decentralized markets.
Time is still important. But, rather than simply rewarding the first market participant who gains new information, the potential upside is proportional to how much of a time advantage they have.
Web3 Interoperability Startup Backed by Theory Ventures
While Contro is still under development and does not yet support any live marketplaces, in a recent interview with TechCrunch, Initia co-founder Stan Liu said the platform could be a game changer for prediction markets.
“Recently, with all the presidential debates, prediction markets have come to the forefront again,” he said. The problem with platforms like Polymarket, he added, “is that in order to facilitate all these types of trades and have actual volume, you need a really big amount of underlying liquidity on the protocol itself.”
In contrast, Initia-based markets like Contro support many different sources of liquidity without the need for complex asset bridges and multiple swaps.
To help build on this vision, Initia recently closed a $14 million funding round, with most of the capital coming from Tomasz Tunguz’s Theory Ventures.
The comparison with Polymarket is significant given that the Polygon-based prediction market is also reportedly looking for fresh funding.
Polymarket Seeks Fresh Funding Amid CFTC Scrutiny
In the midst of CFTC scrutiny, Polymarket is looking to raise an additional $50 million through a traditional equity-based funding round or a new token.
The hunt for funding comes as the platform faces a looming dropoff in activity after November’s elections.
It is also subject to heightened scrutiny from the Commodity Futures Trading Commission (CFTC), which previously fined the company $1.4 million in 2022.
Although Polymarket agreed to prohibit U.S.-based users from accessing the platform, recent comments from CFTC Chair Rostin Behnam suggest further action isn’t off the cards.
“If anyone, Polymarket or otherwise, conducts themselves in a way that breaks the law we will use our civil enforcement authority to make sure that conduct stops,” he told an audience at the Georgetown Psaros Center for Financial Markets and Policy on Sept. 17.
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