P2P Trading of Derivatives Platform Flux Will Allow Users to Create Prediction Markets on Startups
Startups in the cryptocurrency world have been largely protected by the community surrounding them, as network effects and accredited investor laws protect them. However, there is a new platform that aims to shake things up called Flux. According to The Block, this platform will make it possible to bet on the success or failure of various startups.
The project was originally founded by Peter Mitchell, Jasper De Gooijer, and Jascha Samad, offering a place for investors to engage in peer-to-peer trading of derivatives, specifically concerning startups. The users on the Flux platform have the opportunity to create their own prediction markets, which involve startup milestones like investment rounds, product releases, setbacks, and progress. As Mitchell, the CEO puts it, he and his collaborators believe that there is a significant lack of transparency in the startup sector, and they hope that Flux becomes the “signaling tool” that would improve the accuracy in a startup’s value.
Flux was originally founded earlier last year, stemming from EveryDapp, a previous startup from the co-founders that allowed both users and developers to test out decentralized applications for themselves, while exploring their reach. Though the pre-seed round funding remained undisclosed for the platform, the co-founders attempted to raise a seed round as well, which was meant to fund the ongoing growth of EveryDapp. At the same time, the three individuals felt compelled to create Flux.
Mitchell explained that, when the crypto market was beginning to crash, the co-founders were “frustrated about VC Space.” As a result, they created Flux as a source for venture capitalists to basically follow through with their opinions and bet against the companies that they rejected. To help to built out Flux, the coins chosen for leverage include Ethereum, 0x, Augur, and MakerDAO.
Right now, there has a private alpha that can be accessed for any users that want to see exactly how the platform works before it is fully launched. The two markets for trading are:
- Will Flux Market UG close their seed round by July 1, 2019?
- Will SpaceX launch a manned rocket mission by the end of 2019?
There are other prediction market platforms that allow for peer-to-peer trading in cryptocurrency. Flux is up against several other companies that have the attention of gambling users, like Veil, Guesser, and Augur.
Mitchell believes that Flux is a middle ground for these kinds of services since Guesser is looking to the new users, while Augur is focused on professionals. As for Flux, the company is
“focused on millennials who are [already] in crypto.”
Still, the competition against Flux is not really a concern. Instead, the potential for insider trading poses a risk. With non-public information, a certain level of integrity is required among the employees to keep them from acting on the details that they know. Mitchell explained that the launch will coincide with a curated market that is resistant to insider trading. Still, considering the permissionless nature of what is being created in prediction markets, insider trading is inevitable.
Mitchell remains optimistic about what will happen with the involvement of Flux in crypto investments. considering the inaccuracies in startup valuations. With flux, the “same transparency” available in the private market will be found in the public markets. As such, the founders have to release more details about the products that they offer to consumers.