Anonymous Prediction Market

The Problem Current blockchain prediction markets (like Polymarket) suffer from radical transparency. Since all bets are visible on-chain, large traders ("whales") are easily tracked, leading to copy-trading, front-running, and game-theoretic manipulation before an event settles.

Our Solution We built a "Dark" Prediction Market where users can wager on outcomes without revealing their positions to anyone—not even the validators—until the betting phase is over.

Key Innovations & Technology:

• First Practical "Dark Market" MVP: We present the first functional prototype of an Anonymous Prediction Market. Unlike existing platforms (e.g., Polymarket), our system keeps all betting positions completely hidden until the event concludes, effectively preventing copy-trading and front-running strategies.

• Browser-Native P2P DKG: We implemented a secure Distributed Key Generation (DKG) protocol purely in the browser. By leveraging WebRTC, committee members establish direct Peer-to-Peer connections to securely generate and fragment keys without relying on centralized coordination servers.

• Ephemeral Keys for Async Decryption: We utilize ephemeral private keys to significantly simplify the decryption workflow. This design removes the requirement for all committee members to be online simultaneously for multi-round interactive decryption, allowing for flexible and robust off-chain key recovery.

• Novel Privacy Encoding: We do not simply encrypt a "Yes/No" boolean. Instead, we encode the betting direction into the parity (odd/even nature) of a random elliptic curve point. This ensures the ciphertext looks mathematically indistinguishable from random noise.

• Zero-Knowledge Betting: Users generate a ZK-Bet Proof locally (using SnarkJS). This proves the bet is valid and backed by funds without disclosing the direction, ensuring total privacy.

• Threshold Security: A decentralized committee performs Distributed Key Generation (DKG). The private key is fragmented, so no single entity can decrypt the market prematurely.

• Gas-Efficient Settlement: Instead of expensive on-chain decryption for every bet, the committee decrypts off-chain and submits a single Batch Opening Proof to verify the aggregate results and payouts, significantly reducing gas costs.

Protocol Workflow

The lifecycle of a prediction market in our protocol consists of three verifiable stages:

1. Committee Setup

• A decentralized committee of n members with threshold t performs Distributed Key Generation (DKG)

• Generates distributed key shares for an implicit sk and derives public key pk where pk = g^sk

• At least t members must collaborate to recover the private key for decryption

2. Betting Phase

• Users encode betting direction into elliptic curve point parity: side_i = (m_i.X mod 2)

• Generate ElGamal threshold encryption: ct_i = (v_i, e_i) where v_i = g^β_i, e_i = m_i + pk^β_i

• Create Poseidon commitment: comm_i = Poseidon(m_i || side_i || salt || amount_i || address_i)

• Generate ZK proof proving bet validity without revealing direction

• Submit (address_i, amount_i, ct_i, comm_i, π_i) on-chain

3. Batch Opening Phase

• Committee decrypts all bets off-chain using recovered private key

• Generate batch ZK proof for all decrypted bets

• Submit aggregated amounts (sum_0, sum_1) and batch proof on-chain

• Oracle provides winning direction for settlement and reward distribution

📖 For a deep dive into the cryptographic implementation, please refer to our detailed documentation: Protocol Specification (GitHub)

Business Model

Our model aligns incentives to sustain a decentralized, private market:

• Protocol Fees (Revenue): We charge a small percentage fee on the winning pot upon settlement. Users are essentially paying a "privacy premium" for copy-trading protection and MEV resistance.

• Committee Incentives (Cost): A portion of these fees is automatically distributed to committee members. This incentivizes honest participation in key generation and ensures timely off-chain decryption.

Roadmap (Revised)

• Phase 1: MVP (Completed ✅) We have successfully deployed the core privacy loop, including PredictionMarket.sol, functional ZK circuits (ZK-Bet, Batch-Open), and a React frontend with client-side proving.

• Phase 2: Decentralization & Variety (Next Step) We will implement a decentralized Oracle mechanism to ensure trustless resolution and enrich prediction options to support diverse market types.

• Phase 3: Advanced Features (Future) We plan to upgrade to Non-Interactive DKG to minimize coordination friction and enable support for complex reward curves for more sophisticated market dynamics.

Compliance declaration (Projects must disclose whether they involve regulated assets)

• No / Not Applicable. The Anonymous Prediction Market is a decentralized protocol designed to facilitate privacy-preserving information discovery.

Deployment & Demo

• Live Demo: Launch App

• Smart Contract (Mantle Sepolia): 0xd6a0485F847f93263808cA0b0c2C0F4Ca9E19a3a