Baozi Blends Web3 Prediction Markets with AI and Solana Devnet Experimentation

The Prediction Market Renaissance

Prediction markets are having a moment. Polymarket’s $3+ billion in election trading volume demonstrated that when stakes are real, markets aggregate information better than polls, pundits, or models. Kalshi’s regulatory approval in the U.S. signaled institutional acceptance. And now, a wave of crypto-native platforms is pushing the boundaries of what prediction markets can be.

Baozi represents the next evolution: a Solana-based prediction market designed from the ground up for both human traders and AI agents. With its devnet now public, the protocol offers a glimpse into how prediction markets might operate in an AI-augmented future.

Architecture for the AI Era

Most prediction market protocols treat AI as an afterthought—perhaps a tool for traders or an oracle for resolution. Baozi inverts this relationship, building AI interaction into its core architecture through the Curator-Validator Protocol.

How It Works

“`

Human or AI Curator          Truth Validator Agent

        |                            |

        +– Proposes market          |

        |   with parameters          |

        |                            +– Verifies feasibility

        |                            +– Pre-commits resolution hash

        |                            |

        |   [Market Trading]         |

        |                            |

        +– Confirms resolution <—-+– Resolves with proof

“`

This architecture enables:

– Autonomous market creation: AI agents can identify prediction opportunities and create markets without human intervention

– Trustless resolution: Truth Validators commit to outcomes before markets close, preventing manipulation

– 24/7 operation: Markets can be created, traded, and resolved around the clock by AI systems

MCP Server Integration

Baozi exposes a Model Context Protocol (MCP) server—the emerging standard for AI agent tool use. This allows large language models to:

– Query market data and calculate expected values

– Create markets with appropriate parameters

– Execute trades based on probability assessments

– Provide resolution data through oracle interfaces

The implication: prediction markets that scale with AI capabilities rather than human attention.

Technical Innovation on Solana

Pari-Mutuel Pools

Unlike order book or AMM-based prediction markets, Baozi implements pari-mutuel pools:

– All positions for an outcome enter a shared pool

– Winning pool splits losing pool proportionally

– No liquidity providers, market makers, or order matching required

– Perfect for long-tail markets with irregular trading

This model particularly suits AI-generated markets where traditional liquidity might be thin.

Three-Layer Market System

Baozi introduces layered market access:

| Layer    | Resolution Options              | Use Case                         |

|———-|———————————|———————————-|

| Official | Platform guardians              | High-stakes curated markets      |

| Labs     | Creator OR Council voting       | Community experimentation        |

| Private  | Creator OR Council voting       | Invite-only groups               |

Council voting supports 3 or 5 members with a configurable threshold. Future updates will add AI-based resolution powered by Truth Validator agents for automated Labs market creation and resolution.

Race Markets

While most prediction protocols limit outcomes to binary YES/NO, Baozi supports Race Markets with 2-10 outcomes. Winner-takes-all pari-mutuel payout means:

– All losing pools flow to winning outcome holders

– No complex multi-outcome odds calculation

– Natural fit for sports, elections, competitions

DeFi Integration Potential

Baozi’s V5 development introduces conditional tokens traded on Orca Whirlpools (Solana’s leading concentrated liquidity AMM). This creates:

– Instant trading: Buy/sell YES or NO tokens at market prices

– LP opportunities: Provide liquidity to prediction market pairs

– Composability: Conditional tokens integrate with broader DeFi ecosystem

– Arbitrage: Price discrepancies between V4 pools and V5 AMM

For DeFi builders, this means prediction markets that compose with existing Solana infrastructure rather than operating in isolation.

Tokenomics and Incentives

On-Chain Affiliate System

Baozi rewards community builders with a 1% affiliate commission on all referred positions. Unlike centralized affiliate programs, Baozi tracks referrals entirely on-chain:

– Referral relationships recorded permanently

– Commissions accrue automatically per position

– Instant, trustless payouts

– Transparent attribution for all parties

This creates genuine incentive alignment between the protocol, creators, and community builders.

Security Considerations

Baozi implements multiple security layers:

1. Defense-in-depth: Anchor constraints plus runtime authorization checks
2. Dispute system: Configurable challenge window before resolution finality
3. One-time operations: Dust sweep and sensitive functions execute exactly once
4. Council resolution: Multi-sig voting (3 or 5 members) for Labs and Private markets
5. Checked arithmetic: No overflow vulnerabilities throughout the codebase

The 8,700+ line smart contract has undergone security review with critical fixes deployed in V4.7.6.

Market Safety Rules

Baozi enforces strict market creation guidelines:

– 24-hour buffer: Markets must close 24+ hours before outcome determination

– Manipulation resistance: No markets where outcome can be cheaply influenced

– Source reliability: Resolution requires tier-1 official sources

– Temporal separation: Measurement periods must be fully in the future

These rules prevent the information asymmetries and manipulation vulnerabilities that plague less rigorous platforms.

The Competitive Landscape

| Feature          | Baozi          | Polymarket    | Kalshi        |

|——————|—————-|—————|—————|

| Chain            | Solana         | Polygon       | Centralized   |

| Currency         | SOL            | USDC          | USD           |

| Race Markets     | Yes (2-10)     | No            | Limited       |

| AI Integration   | Native         | No            | No            |

| Affiliate System | 1% on-chain    | No            | No            |

| Layer System     | 3 tiers        | Single        | Single        |

| Resolution       | Multiple modes | UMA Oracle    | Centralized   |

Getting Started

The devnet is live for experimentation:

1. Connect wallet to baozi.ooo
2. Get devnet SOL from faucet
3. Create or participate in markets

Resources:

– Platform: https://baozi.ooo

– Overview: https://baozi.ooo/overview

– Labs: https://baozi.ooo/labs

– Affiliate: https://baozi.ooo/affiliate

What’s Next

Baozi’s roadmap targets:

– Mainnet Launch: Production deployment with real SOL

– V5 AMM Markets: Conditional tokens on Orca Whirlpools

– AI-Based Resolution: Automated Labs market creation and resolution via Truth Validators

– Cross-Chain: Expanding beyond Solana

– Governance: Potential token for protocol governance

Read the full Baozi documentation and experiment with devnet markets today.

– Platform: https://baozi.ooo

– Overview: https://baozi.ooo/overview

– Labs: https://baozi.ooo/labs

– Affiliate: https://baozi.ooo/affiliate

– Telegram: https://t.me/baozibet

Baozi is in active development on Solana devnet. Prediction markets carry financial risk. This article does not constitute financial advice.