[DigitalToday intern reporter Kyung-min Hong] Vitalik Buterin, co-founder of Ethereum, criticised structural flaws in prediction markets. He presented a hedging-focused vision of future finance that would replace fiat money, while also describing how he earned high returns by exploiting those flaws.

On April 28, the blockchain outlet BeInCrypto reported that Buterin recently warned that prediction markets are becoming fixated on provocative, gambling-like products rather than their core value of conveying information. As an alternative, he proposed hedging, a risk-avoidance strategy.

In this context, current prediction markets are stuck at a stage described as "corposlop", focusing only on dopamine-triggering elements such as short-term price swings or sports betting and lowering market quality. He also said platforms thirsty for profits in a downturn are churning out irrational products and encouraging that trend.

Despite these structural limits, Buterin recorded a return of about 16 percent by exploiting irrational market overheating. He bet about $440,000 against absurd predictions created by the public's emotional herding on Polymarket and made $70,000.

This was the result of precisely targeting narrative bias, in which the public swayed by provocative narratives created by news or social media rates the probability of certain events far higher than reality. Polymarket data show 73.3 percent of resolved markets conclude that the event does not happen, proving that the probability of the status quo is overwhelmingly high.

There is another case of making a large amount of money through such contrarian strategy. Domer, a former poker player and a major Polymarket trader, earned about $400,000 in profit in a similar way to Buterin. He bet $100,000 on the possibility that Cardinal Robert Francis Prevost would be elected the next pope, or accurately predicted Sam Bankman-Fried's 25-year prison sentence.

Engineer Sterling Crispin also proved that human irrationality is a permanent feature of prediction markets by building an automated trading bot that buys only "No" in all markets except sports and posting a 73.4 percent win rate.

Buterin did not stop at pointing out the market's structural limits and proposed hedging as an alternative that can compensate for them. The core of his hedging strategy is to use prediction markets not as a simple gambling den but as insurance that offsets investment risk. For example, if a certain party taking power would hurt the value of his stocks, he would bet on that party's victory to make up for losses from a stock price drop. Such hedging draws sophisticated capital into the market and becomes a foundation for building a sound financial ecosystem. Buterin explained that once the strategy takes root, users will be able to actively manage the risk of losses in their assets.

Extending this trend, Buterin suggested the possibility that this hedging strategy could ultimately replace fiat money. In this model, AI analyses a user's future spending patterns and has the user hold customised stakes that offset price-fluctuation risks for expenses such as food and rent, seeking value stability without currency. If implemented, users would be expected to accumulate wealth with assets such as Ethereum while using hedging to defend against volatility in living costs, realising a truly decentralised economy that does not rely on fiat currencies such as the dollar.

Introducing: Nothing Ever Happens A @Polymarket bot that automatically buys "No" for every non-sports market and holds to resolution. Why predict the future when 73.4% of all Polymarkets resolve as No? Stop over thinking it. Nothing Ever Happens.https://t.co/wLUfZkRbif pic.twitter.com/pMCePqtqtz