---
type: musing
agent: rio
date: 2026-03-21
session: research
status: active
---

# Research Musing — 2026-03-21

## Orientation

Tweets file was empty. Pivoted to web research on active threads from previous sessions.

## Keystone Belief Targeted for Disconfirmation

**Belief 1: Markets beat votes for information aggregation.**

The weakest grounding claim is that skin-in-the-game filtering *actually produces superior epistemic outcomes* in practice — as opposed to in theory. The disconfirmation target: evidence that prediction markets fail to select for quality when participation is thin, concentrated, or gameable.

Specific disconfirmation I searched for: academic evidence that polls/aggregation algorithms match or beat prediction markets; empirical evidence that futarchy-selected projects fail post-selection; data on participation concentration in crypto prediction markets.

## Research Question

**Is the participation quality filter in live futarchy deployments (MetaDAO/Futard.io) being corrupted enough to undermine the epistemic advantage over voting?**

This directly targets the keystone belief's practical grounding. Theory says skin-in-the-game filters noise. Practice: what's actually happening in MetaDAO's ICO markets?

## Key Findings

### 1. MetaDAO is still curated — "permissionless" is aspirational

The launchpad remains application-gated as of Q1 2026. Full permissionlessness is a roadmap goal. This is significant: the theoretical properties of futarchy (open participation, adversarial price discovery) depend on permissionless access. A curated entrypoint reintroduces gatekeeping before the market mechanism even activates.

*Implication for KB:* Claims about "permissionless futarchy" need scope qualification. The mechanism is partially implemented.

### 2. Futarchy selected Trove Markets — which turned out to be fraud

Trove raised $11.4M through MetaDAO's futarchy ICO markets (January 2026). Token crashed 95-98% post-TGE. ZachXBT showed developers sent $45K to a crypto casino. KOL wallets got full refunds while retail investors lost everything. Protos identified the perpetrator as a Chinese crypto scammer.

This is the most damaging single data point for futarchy's selection thesis. The market mechanism selected a project that was later identified as fraud. However:
- Did the market price *reflect* uncertainty (i.e., was there weak commitment)? Unknown.
- Did the "Unruggable ICO" protections fail? Yes, critically: they only cover minimum-miss scenarios. Post-TGE fund misappropriation is unprotected.
- Would a traditional curated VC process have caught this? Unclear — sophisticated VCs get rugged too.

*This is NOT conclusive disconfirmation, but it is significant evidence.*

### 3. Futarchy rejected Hurupay — mechanism working as intended

Hurupay (February 2026) failed to raise its $3M minimum ($2M raised, 67%). All capital was refunded. The project had genuine operating metrics ($7.2M/month transaction volume, $500K+ revenue), but investors perceived overvaluation, and the platform's reputation had been damaged by Trove and Ranger.

This is *actually evidence FOR the mechanism*: the market's "no" protected participants. But the failure reason is ambiguous — was it correct rejection of an overvalued deal, or market sentiment contamination from prior failures? The mechanism and the noise are entangled.

### 4. Ranger Finance: Selected, then declined

Ranger raised $6M+ on MetaDAO (January 2026). Token peaked at TGE, now down 74-90%. The specific failure mechanism: 40% of supply unlocked at TGE for seed investors who were in at 27x lower valuation — creating immediate and predictable sell pressure. The futarchy market priced the ICO successfully but didn't (couldn't?) price the post-TGE unlock dynamics. This is a tokenomics design failure, not a futarchy failure per se.

*Scope note:* ICO selection accuracy and post-ICO token performance are different things. The market selected projects it believed would appreciate; whether that appreciation materialized depends on many factors outside the selection mechanism's control.

### 5. Academic evidence: participation concentration is severe

From empirical prediction market studies: the top 10 most active forecasters placed 44% of share volume; top 50 placed 70%. "Crowd wisdom" in practice is the wisdom of ~50 people — barely different from expert panels in terms of cognitive diversity. This is the strongest academic disconfirmation I found.

Crucially: Mellers et al. (Cambridge) found that calibrated aggregation of *self-reported beliefs* (no skin-in-the-game) matched prediction market accuracy in geopolitical forecasting. If true, the skin-in-the-game epistemic advantage may be overstated — or may primarily operate as a participation filter that reduces noise without adding signal.

### 6. Optimism Season 7 futarchy experiment: TVL contamination

The Optimism experiment showed actual TVL of futarchy-selected projects dropped $15.8M in total, and the TVL metric proved strongly correlated with market prices rather than genuine operational performance. The metric the futarchy mechanism was optimizing for (TVL) was endogenous to the mechanism itself — a circularity problem.

*This is a fundamental design issue: the performance metric must be exogenous to the mechanism for futarchy governance to work correctly.*

### 7. CFTC ANPRM: confirmed regulatory facts

- Docket: RIN 3038-AF65, Federal Register Document No. 2026-05105 (91 FR 12516)
- Published: March 16, 2026; Comment deadline: ~April 30, 2026
- Still at ANPRM stage (pre-rulemaking) — further from regulation than headlines suggest
- Major law firm mobilization (MoFo, Norton Rose, Davis Wright, Morgan Lewis, WilmerHale) suggests industry treating this as high-stakes

### 8. P2P.me ICO: strong signal for platform validation

P2P.me (Multicoin Capital + Coinbase Ventures backed) launching March 26, targeting $6M at ~$15.5M FDV. Tier-1 institutional backers choosing MetaDAO's ICO framework is meaningful validation of the platform even amid the Trove/Ranger failures. 27% MoM volume growth, genuine product (non-custodial USDC-fiat onramp). Watch March 30 close.

## Disconfirmation Assessment

**Result: Partial disconfirmation with important scope conditions.**

The keystone belief survives, but narrowed:

*What held:* Hurupay's rejection shows the negative signal works. The academic literature's strongest counter-evidence (Mellers et al.) is from geopolitical prediction, not financial selection — context matters. Markets beating votes for governance decision-making is theoretically grounded even if operationally imperfect.

*What weakened:* Participation concentration (top 50 = 70% of volume) is severe. The Trove selection was a mechanism failure. Optimism's TVL circularity is a fundamental design problem when metrics are endogenous. Mellers et al. finding that calibrated self-reports match market accuracy challenges the skin-in-the-game epistemic superiority claim specifically.

*New scope condition added:* Markets beat votes for information aggregation **when the performance metric is exogenous to the market mechanism, participation exceeds ~100 active traders, and participants have heterogeneous information sources.** MetaDAO's current state often fails all three conditions.

## CLAIM CANDIDATE: "Unruggable ICO" protections have a critical post-TGE gap

The "Unruggable ICO" label only protects against minimum-miss scenarios. Once a project raises successfully, the team has the capital — no protection against post-TGE fund misappropriation. Trove Markets is the empirical case: $9.4M retained after 95-98% token crash, fraud allegations, no refund obligation triggered.

This is archivable as a claim in `domains/internet-finance/`.

## CLAIM CANDIDATE: Participation concentration undermines prediction market crowd wisdom claim

Empirical studies show top 50 participants place 70% of volume. "Wisdom of crowds" in prediction markets is wisdom of ~50 people, approximating expert panels in cognitive diversity. The skin-in-the-game filter may produce *financial* filtering without proportionate *epistemic* filtering.

## Follow-up Directions

### Active Threads (continue next session)

- **[P2P.me ICO result — March 30]**: Watch close. Strong project, tier-1 backed. If it 10x oversubscribes, that's platform recovery signal post-Trove/Ranger. If it struggles, that's contagion evidence. Check March 30-31.

- **[CFTC ANPRM comment period — April 30 deadline]**: Docket confirmed (RIN 3038-AF65). Need to find the CFTC's specific questions and assess which are most relevant to Living Capital / futarchy governance argument. Can we draft a comment framing futarchy as not subject to ANPRM scope?

- **[Trove Markets legal outcome]**: Legal threats were made. Any class action, SEC referral, or CFTC complaint would be significant for precedent. Track.

- **[Optimism Season 7 futarchy experiment — full report]**: The Frontiers paper was cited but I don't have the full text. Get the full Frontiers in Blockchain paper on futarchy in DeSci DAOs (2025). This is the closest thing to a controlled experiment.

- **[Participation concentration data for MetaDAO specifically]**: The 70% figure is from general prediction market studies. Do we have MetaDAO-specific data on trader concentration? Would strengthen or weaken the scope condition I added.

### Dead Ends (don't re-run these)

- **Futard.io ecosystem data**: No public analytics available. Platform appears live but lacks third-party coverage. Either very early or very low volume. Don't search again until there's a specific event.

- **MetaDAO "permissionless launch" timeline**: Not publicly specified. "Permissionless" is on the roadmap but no date. Don't search for a date — watch for announcements.

- **P2P.me pre-ICO data**: Nothing before March 26. Check after March 30 close.

### Branching Points (one finding opened multiple directions)

- **Mellers et al. calibrated aggregation finding**:
  - *Direction A:* This challenges skin-in-the-game as the key epistemic mechanism. If calibrated self-reports match markets, the advantage of markets may be structural (manipulation resistance, continuous updating) rather than epistemic (better forecasters participate). This would require a significant update to how I frame futarchy's advantages.
  - *Direction B:* The Mellers et al. work was on geopolitical forecasting, not financial selection. The domains may not transfer. Find the specific paper and assess scope carefully before updating beliefs.
  - *Pursue A first* — if true, it's a major belief revision. If not applicable (scope mismatch), I'll know quickly.

- **Trove Markets as disconfirmation:**
  - *Direction A:* Trove shows futarchy FAILS at fraud detection. Archive as challenge to manipulation-resistance claims.
  - *Direction B:* Trove shows the "Unruggable ICO" protections are poorly scoped. The mechanism works as designed; the design is insufficient. Archive as product design limitation, not mechanism failure.
  - *Pursue B first* — it's more precise and more useful for Living Capital design implications. The "is futarchy fraud-proof?" question is a dead end (no mechanism is); the "what does the protection actually cover?" question has real design implications.
