Polymarket investor Vitalik Buterin says prediction markets need to stop catering to ‘dumb opinions’

Ethereum co-founder Vitalik Buterin said he is “starting to worry” about the state of prediction markets, arguing that the sector’s growing reliance on uninformed speculators threatens its long-term viability. In a post on X on Friday, Buterin called on platforms to pivot from speculative gambling toward AI-powered hedging tools designed around real-world consumer spending.

Prediction markets “seem to be over-converging to an unhealthy product market fit: embracing short-term cryptocurrency price bets, sports betting, and other similar things that have dopamine value but not any kind of long-term fulfillment or societal information value,” Buterin wrote.

The comments represent a notable escalation from someone who had participated in Polymarket’s $45 million Series B funding round and had previously defended the platform’s more controversial markets, including bets on geopolitical events.

Buterin divided current market participants into “smart traders” who profit from information and “money losers” who absorb those profits. The latter group, he argued, is currently dominated by retail gamblers, and platforms that depend on this dynamic risk building communities that actively encourage uninformed trading.

“There is nothing fundamentally morally wrong with taking money from people with dumb opinions,” he wrote. “But there still is something fundamentally ‘cursed’ about relying on this too much.”

To fix the problem, Buterin laid out a framework in which prediction markets evolve into generalized hedging instruments. Under his proposal, onchain markets would be tied to price indices across categories of goods and services, broken down by region. Users would run local AI large language models that analyze their personal spending patterns and construct customized baskets of prediction market positions representing expected future outlays.

The idea extends a line of thinking Buterin has developed over several months. In August, he told followers on Farcaster that most major prediction markets don’t pay interest, making them “very unappealing for hedging.” In December, he floated a trustless gas futures market on Ethereum. And just last week, he outlined a broader vision for Ethereum’s intersection with AI, arguing that prediction markets and decentralized governance systems could become more viable if AI tools are used to scale human judgment.

This latest proposal goes further. Buterin argued that if prediction markets are denominated in productive assets like interest-bearing instruments or wrapped equities, they could eliminate the need for fiat-pegged stablecoins entirely. “We do not need fiat currency at all!” he wrote. “People can hold stocks, ETH, or whatever else to grow wealth, and personalized prediction market shares when they want stability.”

That position dovetails with his January comments about the structural fragility of decentralized stablecoins, in which he questioned whether dollar-pegged assets would remain sustainable over a 20-year horizon.

Buterin urged the prediction market industry to “build the next generation of finance, not corposlop.” 

The critique lands during a period of surging institutional interest in the prediction market sector. Kalshi and Polymarket processed over $44 billion in combined volume in 2025, with Kalshi valued at $11 billion and Polymarket at $9 billion after aggressive fundraising rounds. Jump Trading recently agreed to serve as a market maker for both platforms in exchange for equity stakes, and Coinbase launched prediction markets in all 50 U.S. states via Kalshi’s infrastructure late last month.

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