---
type: claim
domain: internet-finance
secondary_domains: [collective-intelligence]
description: "Optimism futarchy drew 88.6% new governance participants but predictions overshot reality by 8x, suggesting play money enables engagement without accuracy"
confidence: experimental
source: "Optimism Futarchy v1 Preliminary Findings (2025-06-12), 430 forecasters, 88.6% first-time participants"
created: 2025-06-12
---

# Play-money futarchy attracts participation but produces uncalibrated predictions because absence of downside risk removes selection pressure

Optimism's futarchy experiment achieved remarkable participation breadth—88.6% of 430 active forecasters were first-time Optimism governance participants, spanning 10 countries across 4 continents, averaging 36 new users per day and 13.6 transactions per person. This demonstrates play-money futarchy can overcome the participation barriers that plague traditional governance.

However, this engagement came at the cost of prediction accuracy. Markets overshot actual outcomes by approximately 8x ($239M predicted vs $31M actual TVL increase). The play-money structure created no downside risk for inflated predictions—participants could express optimistic views without capital consequences. 41% of participants hedged their positions in the final days specifically to avoid losses, revealing that even play-money participants cared about winning but not enough to discipline initial predictions.

The mechanism successfully filtered 4,122 suspected bots down to 430 genuine participants, showing the platform could maintain quality control. But the absence of real capital at risk meant the selection pressure that makes markets accurate—where overconfident predictors lose money and exit—never engaged. Strategic voting to influence grant allocations further corrupted price discovery.

This creates a fundamental tradeoff for futarchy adoption: play money enables permissionless participation and experimentation without regulatory friction, but sacrifices the calibration that makes prediction markets valuable. Real-money futarchy faces the opposite constraint—better calibration through skin-in-the-game, but regulatory barriers and capital requirements that limit participation.

## Evidence
- 430 active forecasters after filtering 4,122 suspected bots
- 88.6% first-time Optimism governance participants
- 5,898 total trades, average 13.6 transactions per person
- Geographic distribution: 10 countries, 4 continents
- Prediction accuracy: $239M forecast vs $31M actual (8x overshoot)
- Behavioral pattern: 41% hedged positions in final days to avoid losses
- Play-money structure: no real capital at risk

---

Relevant Notes:
- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements.md]]
- [[speculative markets aggregate information through incentive and selection effects not wisdom of crowds.md]]
- [[MetaDAOs futarchy implementation shows limited trading volume in uncontested decisions.md]]

Topics:
- [[domains/internet-finance/_map]]
- [[core/mechanisms/_map]]
