Development Background

The integration of artificial intelligence (AI) and blockchain technology continues to give birth to new application paradigms. In the early stages, the core team of MAI protocol envisioned combining AI with decentralized prediction markets, and began preparatory work such as designing technical frameworks and theoretical research, exploring how to integrate advanced machine learning technologies with the decentralization and smart contract features of blockchain, in order to build an innovative prediction market platform.

After determining the technical roadmap, the team began to invest in the actual development of the platform from 2019 to 2022, dedicated to building a platform that integrates real-time data, secure smart contracts, and AI-driven predictive tools, providing the infrastructure for users to create and manage event-driven prediction markets across multiple domains such as sports, politics, and finance.

As an innovative product combining AI with decentralized prediction markets, MAI Protocol is gradually emerging from the end of 2024 to 2025. Currently, the platform is still under development, continuously improving functions such as allowing participants to flexibly configure markets, automated strategies, etc., and conducting multiple rounds of internal testing and small-scale external testing to ensure the stability, security, and user experience of the platform, gradually moving towards official operation.

Image source:https://maiprotocol.com/

The MAI protocol will be gradually launched in 2025, first deployed on some test networks or specific blockchains, and then undergo larger-scale user testing and market promotion. Gate.io has launched its native token MAI on January 27, 2025.

Operating mechanism

Based on blockchain technology, the MAI protocol constructs a decentralized prediction market. Participants can predict and place bets on various event outcomes in this market, such as sports game results, election results, economic indicator trends, etc. The market operates in a decentralized manner through smart contracts, and the specific operation process is as follows:

(1) Event Creation and Publishing

Any user can become a event initiator and determine the event to be predicted based on their own needs or market hotspots of interest. For example, predicting whether a company’s revenue in the current quarter will exceed a specific amount, or whether the price of a popular cryptocurrency will rise in the next month.

The initiator needs to set clear event details, including the specific content of the event, the options for predicting the outcome, and the deadline for the event. For example, for an event predicting the price of a cryptocurrency, it is necessary to determine a specific price threshold to judge whether it will rise or fall, as well as the specific time point for determining the result.

The initiator sends the pre-set prediction event information to the blockchain network in the form of a transaction through the MA protocol. Smart contracts record and verify this information to ensure the accuracy and completeness of the event information. Subsequently, the event will be made public in the decentralized prediction market for other participants to view and join.

(2) Participants Bet

Market participants can view detailed information on all published prediction events on the blockchain. They can evaluate and judge the potential outcomes of events based on the AI analysis data provided by the MAI protocol.

Based on their own judgment, participants choose the outcome they believe is most likely to occur from the outcome options set for the event, and decide the amount of the bet. For example, in the above-mentioned cryptocurrency price prediction event, if a participant believes that the price will rise, they would choose the option of ‘Rise’ and invest a certain amount of cryptocurrency as a bet.

Participants send transactions containing betting information (betting events, betting options, betting amounts, etc.) to the blockchain network through the client provided by the MAI protocol. After receiving the transaction, the smart contract verifies whether the participant’s account balance is sufficient to pay the betting amount and other information. After successful verification, the betting information is recorded on the blockchain, and the corresponding betting funds are frozen.

(3) Event Result Determination

When the predicted event reaches the deadline, it is necessary to obtain the actual result data of the event to determine the winner and loser. The data source can be external data provided by the oracle, or information that can be directly confirmed on the blockchain. For example, for a company’s revenue prediction event, it may be necessary to obtain the actual revenue data of the company from an authoritative financial data platform through the oracle. For cryptocurrency price prediction events, price information at the deadline can be obtained directly from relevant transaction data on the blockchain. The smart contract will verify the obtained data to ensure its authenticity and accuracy.

Smart contracts will compare the actual results obtained with the options bet by the participants to determine which participants’ predictions are correct and which are incorrect.

(4) Bonus Distribution and Settlement

After all participants have placed their bets, the bet amount will form a bonus pool. In general, participants who predict correctly will share this bonus pool. The size of the bonus pool will be determined based on the total amount of bets placed and factors such as fees set by the platform.

Smart contracts distribute funds in the prize pool to participants who make correct predictions based on predetermined allocation rules. Typically, the prize is distributed based on the proportion of each correct participant’s betting amount to the total correct betting amount. For example, if three participants make correct predictions with betting amounts of 10, 20, and 30 respectively, and the total correct betting amount is 60, then they will receive 1/6, 1/3, and 1/2 of the prize pool, respectively. Participants who make incorrect predictions usually lose their betting amounts, which will be included in the prize pool for distribution to correct predictors, or used for paying platform fees and other purposes.

Smart contracts transfer the bonus from the bonus pool to the account of the participant who predicts correctly, and release the frozen betting funds of the participant who predicts incorrectly (minus possible fees). The entire process of bonus distribution and fund settlement is carried out on the blockchain, ensuring fairness, transparency, and immutability.

Fairness and transparency

Consensus Mechanism Guarantee: The blockchain network ensures the consistency and integrity of market data by using consensus mechanisms such as Proof of Work (PoW) and Proof of Stake (PoS) to ensure that all nodes reach consensus on the state of the prediction market and transaction records.

Community Governance Participation: The decentralized prediction market of the MAI protocol typically adopts a community governance model, where participants can obtain governance rights through holding platform tokens, and make voting decisions on major matters such as market rule adjustments, parameter optimization, and development of new features, collectively promoting the development and improvement of the prediction market.

Security and Risk Management: Through the encryption technology of blockchain and the security audit of smart contracts, the safe operation of the prediction market is ensured and security incidents such as hacker attacks and data leaks are prevented. At the same time, the market will also establish corresponding risk control mechanisms, such as setting betting limits and risk reserves, to deal with potential market risks.

Token Economy

MAI Protocol is obtained by exchanging Mojito (MOJITO), with a total supply of 1 billion MAI native tokens, contract addresshttps://etherscan.io/token/0x71d898c440aF10566CEa48e12C01F435eC788c7A.

Image source:https://etherscan.io/token/0x71d898c440aF10566CEa48e12C01F435eC788c7A#balances

According to the token distribution address display, most of the MAI tokens are still held by the team. Gate.io holds about 15% of the MAI tokens. Gate.io will launch MAI (MAI) trading at 14:00 (UTC+8) on January 27, 2025.

Image source:https://etherscan.io/token/tokenholderchart/0x71d898c440aF10566CEa48e12C01F435eC788c7A

Summary

As an innovative product combining AI with decentralized prediction markets, MAI Protocol has not yet officially launched its product. It provides more accurate and efficient solutions for prediction in financial markets, sports events, political elections, and other fields. It will gradually launch by 2025. However, as a prediction market, the development of MAI Protocol also faces many challenges such as data privacy and security, regulatory uncertainty, technical stability and reliability, user awareness and acceptance.