MetaDAO’s Futarchy simplifies governance by creating conditional token markets for "approve" and "reject" outcomes. For example, when a proposal like "airdropping tokens to incentivize users" arises, participants stake real assets to trade tokens reflecting their beliefs.

In March 2025, Optimism launched a landmark on-chain governance experiment. Using Futarchy to allocate 500,000 OP tokens over 21 days, this social trial tested prediction markets’ viability in public chain governance while exposing tensions in decentralized decision-making.

Optimism’s March Futarchy experiment allocated 500k OP (100k * 5) to explore incentive distribution models for ecosystem growth. LXDAO member Loxia, a participant, expressed cautious optimism about its future.

How It Works:

• Proposals (e.g., "Airdrop tokens to users") trigger two conditional token markets: "approve" and "reject."

• Participants stake assets to trade these tokens. Buying "approve" tokens signals support; "reject" tokens indicate opposition.

• The proposal’s fate hinges on the weighted average price of both markets. Participants redeem staked assets post-decision, but outcomes directly impact token value.

Key Insights:

• Profit motives align with collective goals: To win, participants must analyze proposals’ long-term impacts rather than follow trends.

• MetaDAO observed that market manipulation attempts (e.g., malicious actors buying "approve" tokens) backfire due to high costs.

• Futarchy forces decisions through financial博弈, theoretically filtering out impulsive voting.

Economist Robin Hanson proposed Futarchy as a governance model where elected officials define societal goals, and prediction markets determine optimal policies. Popularized in 2008 by The New York Times, the concept later entered blockchain and DAO discourse.

Core Philosophy:

• “Vote on values, bet on beliefs”:

  • Values: Democratic processes define goals (e.g., "equality").

  • Beliefs: Markets predict policies most likely to achieve those goals.

Criticism:
Economist Tyler Cowen argues that values and beliefs are inseparable. For instance, supporting a policy for ideological reasons (belief) may masquerade as a rational means to a value (equality). Prediction markets struggle to filter out human bias, undermining Futarchy’s theoretical efficiency.

Design Principles:

• Accuracy-based rewards/punishments drive thoughtful decisions.

• Permissionless participation harnesses collective wisdom over centralized gatekeepers.

Setup:

• Prediction Focus: Which of 23 projects would see the highest TVL growth three months after receiving 100k OP grants.

• Participants: Anyone with Telegram/Farcaster accounts received 50 OP-PLAY (fake tokens). OP governance contributors received more.

• Mechanics: Users bet OP-PLAY on "UP" (bullish) or "DOWN" (bearish) tokens for each project.

Results:
Top 5 Futarchy-funded projects (by predicted TVL):

1. Rocket Pool: $59.4M

2. SuperForm: $48.5M

3. Balancer & Beets: $47.9M

4. Avantis: $44.3M

5. Polynomial: $41.2M

Grants Council’s picks (non-overlapping):

• Extra Finance

• Gyroscope

• Reservoir

• QiDAO

• Silo

Flawed Metrics:

• TVL’s shortcomings: ETH price swings distort TVL growth, masking actual project performance.

• @joanbp (March 13): “TVL growth might reflect market trends, not effective grant usage.”

• @Sky (March 17): “Metrics should incentivize beneficial actions to ‘win.’”

Simulated Token Bias:

• @thefett (March 19): “41% hedged bets last-minute to avoid losses with fake tokens.”

• @Milo (March 20): “I diluted insights from experts by guessing.”

Poor UX Undermines Participation:

• High complexity: 6 on-chain interactions per prediction.

• Opaque rules: Users misunderstood token totals and profit logic.

• Low engagement: 19% conversion rate; 13.48% participation from OP governance contributors.

Data Highlights:

• 5,898 total transactions; 41% joined in the final three days.

• 45% projects withheld plans, skewing predictions (e.g., Balancer’s actual TVL dropped $13.7M vs. predicted $47.9M).

1. Metric Design Dictates Outcomes:

• Effective metrics must be measurable, goal-aligned, and resistant to gamification.

• TVL’s USD focus made the experiment a “bet on ETH price” rather than project merit.

Midterm Reality Check (April 9, 2025):

• Futarchy picks: $15.8M TVL drop.

• Grants Council picks: Extra Finance (+$8M), QiDAO (+$10M).

2. Prediction ≠ Objectivity:

• Winners reflected trading skill, not forecasting prowess. Anonymous trader @joanbp topped rankings via 406 trades in 3 days.

• OP governance experts (Badge Holders) underperformed.

3. The Self-Fulfilling Prophecy Dilemma:

• Predictions shape outcomes: Funding favorites creates success cycles, sidelining undervalued projects.

• Participants faced dual incentives: follow the crowd for safety or bet contrarian for higher rewards.

This experiment revealed governance’s potential for gamification and the role of degens (speculators) as proto-governors. By channeling speculative energy into public goods, Futarchy could foster Regen governance—a fusion of博弈 and consensus-building.

The future of DAOs may lie not in sterile deliberation but in play-to-shape systems where投机 becomes collaboration. As Optimism’s trial showed, awakening the “Regen血脉” (regenerative DNA) of degens could redefine Web3 governance—one bet at a time.