The prediction market is undergoing a turning point. Once considered a fringe experiment in Web3, it is now attracting the attention of top global investment banks. Goldman Sachs's latest research is a strong signal of this shift, indicating that the legitimacy and appeal of decentralized, event-driven finance are continuously increasing.

Why is this worth paying attention to? Simply put, prediction markets enable traders to buy and sell contracts based on real-world events—elections, economic data, protocol updates, regulatory developments. The prices in these markets reflect collective wisdom, often producing predictions comparable to, or even more accurate than, traditional analyst models.

When institutions like Goldman Sachs begin to delve into this field, the message is clear: first, they see real prediction and hedging value; second, prediction markets have the potential to evolve into core financial infrastructure; third, Web3 innovations are intersecting with traditional financial-grade research.

What will institutional participation bring to prediction markets? From a practical perspective, it includes increased liquidity, tighter bid-ask spreads, more efficient and transparent market operations, improved risk management systems, and hybrid products combining prediction markets with options, futures, and other derivatives. These improvements will directly enhance market usability and credibility.

Using a historical analogy, this is similar to early DeFi. Back then, DeFi was just experimental, but as infrastructure gradually improved, it became a true game-changer. Prediction markets are likely to follow the same path.

For traders and investors, the influx of institutions means what? The most direct benefit is early participation rewards. If you can identify strong prediction market protocols early, you may gain returns similar to those seen in early DeFi or Layer-1 ecosystems. As the market matures, this window of opportunity will not stay open forever.