Delphy Whitepaper

Wednesday, June 6, 2018
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Delphy Foundation: Revolutionary Platform for Predicting Future Events Bo Wang [email protected] Abstract In essence, the market collects the judgements and confidences of parties involved in the same event, which results in a prediction of Delphy is an open-source, decentralized, mobile prediction the future outcome of the event. Similar to the stock market, which market platform built on Ethereum. The Delphy App is a light serves to assign a price to the future estimated value of a stock, Ethereum node that runs on mobile devices. “prediction markets” assign a value to a belief about the future (a Delphy uses incentives to allow participants in a market to prediction). communicate, instantly and transparently, their wisdom Specifically, prediction markets usually predict the outcome of regarding the outcome of upcoming events, effectively predicting an event by asking questions about possible outcomes. Each possible the future. We designed Delphy from the start to be outcome has its own probability. The sum of the probabilities of all decentralized, which makes it difficult to manipulate prediction the outcomes is equal to 100%. The probability of an outcome results. represents the transaction price of the outcome in the market. In Delphy prediction markets, DPY tokens are used (i) by James Surowiecki, a well-known journalist in the U.S., put Delphy users to pay for a certain prediction through Delphy and forth three conditions for crowd wisdom: diversity of opinion, (ii) to incentivize Delphy users (through the payment of a fixed independence in making opinions and a decentralized organization. number of DPY tokens) to virtually “buy and sell” “outcome Similarly, prediction markets work best when market participants shares” in the Market. Users virtually “buy and sell” such have different backgrounds, do not base their decisions on the “outcome shares” based on what they see as the probability at opinions of others, and base their opinions on local knowledge. any given moment and agree on a virtual “price” that such Prediction markets have three characteristics: transactions will occur. As long as a prediction is active, the 1. Efficient collection of diverse and disparate information. virtual price continues to fluctuate and indicates the probability 2. Effective and transparent incentive mechanisms to obtain of an outcome according to the crowd's wisdom. When a Market truthful and relevant information. matures, meaning the market Event transpires in the real world, 3. Near real-time information updates, so that result manipulation becomes quite difficult. Delphy determines the winning outcome based on the Oracle of the Event. There is no payment of any form (whether in Fiat or Prediction markets are widely used in many sectors, including DPY tokens) between the buyers and sellers with respect to the but not limited to insurance, national defense, healthcare, public purchase and sale of the “outcome shares”. There are no management, sports, entertainment, and even within companies. “winners” and losers” once the Market matures and there will be For example, in 1996, HP Labs and the California Institute of no payment of winnings (whether in the form of DPY tokens or Technology co-chaired a three-year prediction market experiment. otherwise) to “winners” or a deduction of assets (whether in the The study conducted 12 different predictions with 20 to 30 form of DPY tokens or otherwise) from the “losers”. employees from different HP Labs departments (business, finance, The Delphy platform implements three of the necessary marketing, etc.) Experiments showed that more than 75% of the conditions for crowd wisdom put forth by James Surowiecki; predictions were more accurate than HP's official predictions. diversity of opinion, independence in making opinions, and In 2003, the U.S. Department of Defense publicized a "Policy decentralization of organization. Analysis Market" (later dubbed as a "terrorism futures market"), which mainly predicted the political and military turmoil in eight 2~ Prediction Markets Middle Eastern countries as well as the response from the U.S., aimed at improving America’s intelligence gathering capability There are two main methods used in scientific predictions; the around the world. U.S. Senators later rejected and canceled this first is statistics and mathematical models, and the second is machine prediction market. learning and data mining. In essence, these two methods use In 2005, Google announced its use of a prediction market within historical data and software systems to generate predictions. the company to predict product release dates, new office openings In recent years, a third method, "social analysis", is increasing and other strategic events. as a trend in the prediction market. The market uses incentives to is a famous political prediction market where the allow the public, not just identified experts, to contribute their own participants can trade presidential election results from different experience and wisdom, pooling market information together to help countries. The accuracy of the predictions is incredible. For example, make decisions and allowing the group to be more intelligent than a in the 2004 U.S. presidential election, predicted which single individual or expert. states Bush and Kerry would win, and the predictions were surprisingly similar to the election results. 2.1 Theory and Operation Scientific prediction methods have been around since the start of the Information Age. Theories underlying the prediction markets include the Efficient Capital Markets Hypothesis (ECMH) and the Hayek Hypothesis. These hypotheses help explain how information is aggregated such that market prices provide accurate estimates on the likelihood of future outcomes. According to ECMH, capital markets are so efficient in reflecting information about individual stocks and the stock market as a whole, that no amount of analysis to forecast future stock prices can beat the market. The Hayek Hypothesis assumes that market prices are the means to aggregate disparate pieces of information. The market works even when people only have a limited knowledge about their surrounding environment and other parties involved. Page | 1

Delphy Foundation: Revolutionary Platform for Predicting Future Events The prediction market, as accurate as it is, also faces some challenges. It represents public opinion, which can be influenced by many factors. Segmented prediction markets also lack liquidity. People are only concerned about big things or those things related to their own interests; therefore, it is difficult to collect enough samples to generate general predictions. Many people participated when the prediction was about the U.S. presidential election between Clinton and Trump, but it would be another story if it were a presidential election in a small developing country in Africa. The prediction market has also made some big mistakes, the Brexit vote, for example. On June 23, 2016, the day of the Brexit vote, prediction markets forecast that the probability rate of staying in the European Union (EU) was 85%, whereas the reality was that exiting the EU won by a small margin. 2.3 History The following timeline shows important historical events related to prediction markets. 2.2 Accuracy Prediction markets trades on the probable outcome of future events. The future price of contracts reflects the dynamic expectation of the probability of those events. The market is able to amalgamate the collective wisdom of all the participants. Experiments show that the prediction market is often more accurate than traditional predicting tools. It also has many other advantages, like continuous real-time information gathering, active participation, information disclosure, high efficiency, and measurability. Consensus Point, a website whose chief scientist is Dr. Robin Hanson, once announced that the accuracy rate of its prediction markets was 92%. In 2008, a survey found that Iowa Electronic Markets (IEM) of the University of Iowa predicted five presidential elections more accurately than ordinary polls in 74% of all cases. The election data in the figure below clearly shows that the market predictions are quite accurate. The long-term prediction market has a great advantage in accuracy over individual predictions. The more participants, the more accurate the market will be. The following two reasons might help explain why: 1) Due to the complexity of events, no individual can possess a complete set of information. The knowledge is distributed amongst a group of people. 2) Prediction markets provide a mechanism for those with insightful ideas to put forth their information. When different ideas occur, people will vote by altering their trading practices, rather than simply succumbing to the current consensus from peer pressure.

Delphy Foundation: Revolutionary Platform for Predicting Future Events 2.4 Comparison with Traditional Methods anywhere, as well as use the Delphy API and SDK to custom-tailor all kinds of vertical field prediction markets. The following table compares prediction markets with other The following chart summarizes the similarities and differences common methods of gathering information and opinions. between Delphy and existing decentralized prediction markets: 2.5 Redefined by Blockchain Although prediction markets work well, their current centralized implementation has plenty of shortcomings. First, centralized markets cannot prove their own innocence. Many markets are suspected of having been manipulated, subjecting users to financial loss. Second, market finances are usually highly supervised, which results in a lack of user participation and limited transaction volume, thus keeping it out of the mainstream. For example, in the United States, the CFTC forced the famous prediction market to close because it failed to comply with U.S. laws. Third, there is a certain conflict of interest between the prediction markets and current experts, social opinion leaders, and public opinion polling organizations. Today, with the rise of peer-to-peer blockchain technology, prediction markets can take advantage of decentralization and popularize their applications. First, blockchain data is replicated across the network, and its tamper-proof implementation enables prediction platforms to prove their own innocence. Second, decentralization also allows prediction markets to gain global liquidity and the ability to maintain a massive amount of users. Third, blockchain-based prediction markets can attract more insiders and professionals to participate by using token incentives. 2.6 Delphy: The Decentralized Prediction Market Platform Delphy is a decentralized social mobile prediction market platform built on Ethereum. The intrinsic decentralization of Ethereum ensures that predictive results are hard to manipulate which promotes information diversity, independent decision-making and a decentralized organization. Delphy is a mobile application platform for the prediction market and an ecosystem for Prediction as a Service (PaaS). Users can participate in prediction market transactions anytime and

Delphy Foundation: Revolutionary Platform for Predicting Future Events 3~ Delphy Market Mechanism Users can search the system's Live Event Pool, select the Event they are interested in, and create a Market. 3.1 Market Making 3.1.1 DPY Token 3.1.4 Scoring & Trading Delphy will issue its DPY token, which is based on the Delphy uses the Logarithmic Market Scoring Rule (LMSR) to Ethereum smart contract and complies with ERC20 standards. calculate the virtual price of every outcome in the market in real-time ERC20 based tokens enable Ethereum wallets, exchanges and other as traders start to virtually buy and sell shares. LMSR provides smart contracts to interact with a variety of tokens in a common way. virtually unlimited market liquidity. This is different from traditional The DPY token, generated by Delphy smart contracts, will be non-LMSR prediction markets and the stock market. released during the Delphy ICO. In Delphy prediction markets, DPY In general, the more shares of a particular outcome that are tokens are used (i) by Delphy users to pay for a certain prediction virtually purchased, the higher its virtual price will be, while the through Delphy and (ii) to incentivize Delphy users (through the more it is virtually sold, the lower the virtual price. In Delphy, users payment of a fixed number of DPY tokens) to virtually buy and sell can find out real-time virtual prices and trends for each outcome. “outcome shares” (the “shares”) in the Market. Users virtually buy There is no payment of any form (whether in Fiat or DPY tokens) and sell such shares based on what they see as the probability at any between the buyers and sellers with respect to the purchase and sale given moment and agree on a virtual “price” that such transactions of shares. will occur. As long as a prediction is active, the virtual price To incentivize Delphy users to virtually buy and sell shares in continues to fluctuate and indicates the probability of an outcome the Market (and assist with the accuracy of a prediction), Delphy according to the crowd's wisdom. There is no payment of any form users will be paid a fixed number of DPY tokens for their (whether in Fiat or DPY tokens) between the buyers and sellers with participation in the Market. respect to the purchase and sale of shares. 3.1.5 Market Closure When a Market matures, meaning the market Event transpires in the real world, Delphy determines the winning outcome based on the Oracle of the Event. There are no “winners” and losers” once the Market matures and there will be no payment of winnings (whether in the form of DPY tokens or otherwise) to “winners” or a deduction of assets (whether in the form of DPY tokens or otherwise) from the “losers”. Certain transaction fees (e.g., the gas required by Ethereum) occur when a market creation and trading. Delphy will withhold a nominal fee to cover all necessary transaction costs associated with 3.1.2 Create Event the Market. When the Market is liquidated, the Event & Market is officially An “Event” refers to a future event of interest to be predicted in closed with no future transactions allowed in that particular market. Delphy in the form of question and answers. For example, “Will it If the Oracle associated with the Market cannot decide the outcome, rain at 9AM tomorrow in Washington D.C. ?” or users dispute the correct outcome, Delphy will provide a variety of In Delphy, users can create Events based on future events in the ways to resolve the dispute. real world by using the Event Editor and Event Template. When creating an Event, clients submit a detailed description, all possible outcomes, the Oracle that determines the outcome, and other 3.1.6 Messages & Comments information as needed. Events can be open or invitation only. All Delphy users can Every Market in Delphy usually comes with a list of all participate in an open Event, while an invitation-only Event is only necessary outcomes and a comment area where traders can leave visible and available to invited users. messages showing why they choose what they did and the rationale The created Event enters a temporary Event Pool in Delphy. for their choice. Such event-based social activities provide more The system also has an Event Filter, which filters out illegal or trading signals than the prediction virtual price alone. Delphy also unethical events, such as predictions on the assassination of a provides functions like peer-to-peer messaging, OTC trading, etc. country's leader or the overthrow of a government. After filtering, the remaining Events enter the system's Live Event Pool to create 3.2 Scoring Principle Markets The Logarithmic Market Scoring Rule (LMSR), proposed by Dr. Hanson, is an automated market creating mechanism that always maintains a consistent probability distribution to reflect the market's evaluation of each event outcome. LMSR is becoming the de facto standard for prediction markets, as it has many excellent features, such as, infinite liquidity, and the modularity of independent relationships. Many internal prediction markets and projects, such as Inkling Markets, Microsoft, YooNew, Google and General Electric, are using LMSR as a virtual pricing mechanism. In a prediction market, when the market is created from Event , ’s outcome can be one of the following types: • Binary 3.1.3 Create Markets “Will Donald Trump run for re-election?” After users create an Event, they build a corresponding prediction market to provide a trading platform for participants. The outcome can only be “Yes” or “No”.

Delphy Foundation: Revolutionary Platform for Predicting Future Events • List 4.1.3 Swarm “Which pharmaceutical company will release a drug for Swarm is a decentralized file management mechanism that helps Delphy store static files and metadata related to Events and Diabetes from 5/1/2018 to 5/1/2019?” Markets in prediction markets to provide distributed storage and retrieval services for Delphy mobile applications. The outcome will be in a list of 32 items. • Range 4.1.4 Light Ethereum Subprotocol (LES) “What will be the average customer rating for the new LES is a mechanism designed for mobile devices (such as smartphones, etc.) that only downloads the head of a block rather product launch be? than the entire block during blockchain synchronization. It provides The outcome will have a wide range. fully secure blockchain access, but does not participate in mining or consensus formation. LMSR decides how to determine the virtual share price of each event 4.2 Delphy Mobile App outcome, and the probability of each outcome at any point of time. With the ubiquity of smartphones and the success of platforms such as Telegram and Wechat, Delphy adopts the "born mobile" strategy. Delphy takes advantage of the LES protocol of Ethereum to 4~ Delphy Architecture provide a decentralized prediction market as a mobile application. It is a light Ethereum client running independently on mobile devices Delphy is a decentralized social prediction market platform rather than just browser-based or stand-alone desktop applications. built on Ethereum and the Delphy App is a light Ethereum client The Delphy mobile app uses LES to run the Geth and web3.js running on mobile devices. Delphy is an open source project with framework on smartphones, providing powerful and secure functions. contributions from around the world. Users can easily create Events, create a Market according to the Event they have interest in, set the Event & Market description and metadata, quickly query the Event & Market for virtual share price and movement, buy or sell shares and make payments of DPY tokens in different Markets. 4.3 Oracle Oracle is the information release mechanism for the real outcome of Events in Delphy. Oracle determines the predicted outcome of an Event in Delphy by providing a series of APIs, which Delphy uses to determine the outcome of the prediction market to achieve the final settlement. Oracle can be centralized (such as RealityKeys and Oraclize), as well as multi-centralized. A centralized Oracle is enough when a predictive application only needs a single data point to verify the results. For example, in predicting an NBA game, the results on the NBA official website may be enough. For a multi-centralized Oracle, we will devise an incentive mechanism and implement the “m out of n” mode and Oracle's dispute resolution solution. 4.1 Delphy Core Elements 4.4 Delphy Features 4.1.1 Ethereum 4.4.1 Delphy App is a Light Ethereum Client Ethereum is a public, open-source, distributed platform, based Delphy is a mobile platform running a light Ethereum client on blockchain technology that features smart contract (scripting) based on LES. The Delphy App supports all the functions of an functionality and provides a decentralized, trustworthy and Ethereum full node, except mining, and leverages the P2P protocol to permissioned asset issuing and trading infrastructure for Delphy. communicate directly with the other nodes in the Ethereum network. Ethereum is essentially a social computing platform. Delphy is This greatly improves efficiency and makes the Delphy App, SDK a prediction market of social networks and a mobile Distributed and API powerful and scalable. Application (DApp). As a DApp on the public Ethereum blockchain, Delphy helps promote Ethereum to the mass market. 4.4.2 Naturally Mobile 4.1.2 Smart Contract Smartphones are the preferred platform choice for Delphy to develop its application. The Delphy iOS and Android mobile apps Delphy takes advantage of Ethereum smart contracts to issue will launch simultaneously with the Delphy platform, and will DPY tokens, create Events and Markets, connect Oracle and Event improve user friendliness, maximally meet users’ needs, and boost filters, as well as to complete virtual pricing, trading, matching, the popularization of Ethereum and its development environment. liquidity, and so on.

Delphy Foundation: Revolutionary Platform for Predicting Future Events 4.4.3 Customizable Individuals who know news to be bogus have a financial incentive to share their unique information. Users can create Markets using the same Event with different preferences. Each Market may have a different Oracle, and dispute 5.3 Points of Interest (PoI) arbitration mechanism. Users with different preferences can choose With the improvement of people's living conditions, tourism their own Markets for transactions and really achieve personalized has become an important leisure activity for Chinese people. market creation and cooperation. However, because the tourism resources are centralized and limited, most scenic spots are extremely crowded for people travelling during 4.4.4 Event Filter holidays. Only a few famous spots can avoid such congestion. Predicting in advance which scenic spots have relatively fewer User-created Events enter a temporary Event Pool provided by visitors is appealing to most people. Delphy. The system provides a default Event Filter that filters out West Lake - a world-renowned scenic spot in the Zhejiang illegal or unethical events, such as predictions on the assassination of Province of China, took measures to limit the number of tourists it a country's leader or the overthrow of a government. Delphy also receives each year, because the number often vastly exceeds the provides Filter APIs for users to create their own Event filters to maximum carrying capacity set by the country. In recent years, the comply with the laws, regulations and customs in their own countries area has also adopted technology to analyze large amounts of tourist and jurisdictions. Delphy reserves the right to create Event Filters to data, providing a reference point and a basis for managing tourist comply with the laws, regulations and customs in their own countries numbers. The technology also sets appropriate tour routes, and jurisdictions. dynamically processes tourist information and helps develop business strategies. 4.4.5 Social 5.4 Entertainment The Delphy App is a social prediction market interface. The entertainment industry is one of the most prosperous Predicting is a social event, and Delphy includes commenting, P2P industries in the world. According to China’s "13th Five-Year Plan", messaging and OTC, to let users socialize with each other on a single the market cap of the culture and entertainment industry will reach platform. ¥450 billion for 2015, and may be ¥1 trillion in 2020, with the television and film sector alone being valued at ¥500 billion. Prediction markets can be widely used in the entertainment 5~ Delphy Applications industry, for such things as forecasting auditions of variety shows, ratings, movie box office results and so on. Delphy is a mobile platform for the prediction market and an ecosystem of the Predictions as a Service (PaaS) platform. Users can It is notable that Hollywood already has a box office prediction participate in transactions in any prediction market anytime and market. It demonstrated its amazing accuracy with its predictions for anywhere, as well as use the Delphy API and SDK to customize the 2007 Academy Awards Ceremony. The Hollywood Stock prediction markets based on different vertical field parameters. Exchange successfully predicted 32 out of the 39 nominations via Delphy is applicable to prediction markets for insurance, national ranking by transaction prices, and it correctly predicted seven out of defense, health care, public management, sports, entertainment, and the eight main awards before the ceremony officially began. even markets within organizations. 5.1 Science & Discovery Prediction markets have the potential to allocate global scientific research and development resources and efforts more effectively. An efficient mechanism to aggregate data on leading experts’ beliefs on the plausibility of successfully accomplishing scientific goals will help focus resources to more realistic projects. Additionally, many scientific research studies provide data that unfortunately are not reproduceable. Currently, the scientific 5.5 Housing Prices community has increased concern on this topic. Data to gauge the costs associated with irreproducible preclinical research have Housing prices is a topic that concerns most people, as the recently been estimated at US$28 billion a year in the United States. house is usually the highest asset holding for most households, but Governments and companies are investing billions to further key opinion leaders (KOL) and third-party transaction reports are exploration of initially flawed research. Prediction markets will currently the main data sources used to predict current housing provide a mechanism to easily recognize the studies with findings prices. that will be difficult to replicate. Obviously, the prediction market, with the public participating to express their viewpoints, can intuitively reflect current housing 5.2 Fake News price expectations. In addition to purchasers and sellers, this data also provides valuable reference points for governmental macro-control Social media platforms and increasing news sources have made policies and real estate company investment plans. it easy to start and propagate fake news. A group of 16 political scientists and legal scholars in a Science publication, “We must Although there are several channels to collect housing price redesign our information ecosystem in the 21st century to reduce the data, the prediction market will use data released quarterly from spread of fake news and to address the underlying pathologies it has official government sources such as the U.S. House Price Index or revealed.” Their studies report a false story reaches 1,500 people the National Bureau of Statistics of China to ensure data reliability. six times quicker, on average, than a true story does. The consequences associated with fake news are incalculable as deaths have occurred by people believing and trying to discover the validity of fake news. The uncertainty fake news brings to our society about the validity of real news and the prospects of future economic factors create tremendous damage to GDP growth. A prediction markets platform focused on “News Validation” makes it extremely costly for false news to persist as truth.

Delphy Foundation: Revolutionary Platform for Predicting Future Events 6~ Legal Matters and Risk Factors 5.6 Games 6.1 Delphy Legal Structure The online game market size is huge and continues to grow. According to the "2016 China Game Industry Report", the market A non-profit foundation, Delphy Foundation Limited (“Delphy cap of China's game industry exceeded ¥160 billion and shows no Foundation”), has been established in Singapore with respect to signs of slowing anytime soon. In the U.S., the market cap exceeded Delphy, which will act as an independent legal entity to organize a $17 billion. core team to develop such a decentralized prediction market platform For games in the prediction market, we call our APIs within the and application. However, the operation and use of Delphy per se games to provide players with the game playing methods and will be fully subject to and dependent on the community’s autonomy mechanism instead of relying on game developers to include the and the Delphy Foundation will merely be a garden-variety member methods and mechanism. within the community who may put forward proposals or suggestions When it comes to games like theme parks, players can on Delphy’s self-governance without supreme or distinguishable meticulously build and operate their own theme parks and even invite power of authority. friends to join. For example, players can buy land, hire employees The Delphy Foundation will sell, in the form of private sales and set game facilities the way they want them. and crowdsale, DPY tokens that are designed to be used on the Delphy platform. DPY will serve as the payment method and unit of account for users to use Delphy’s services. Nobody will be responsible to repurchase or redeem any sold DPY. DPY, as a kind of virtual commodity with practical uses, are not securities or speculative investment instruments. The Delphy Foundation does not guarantee any intrinsic value of or economic return from DPY. DPY does not represent any real-world assets or rights (such as shares, voting rights, etc.) of the Delphy Foundation. The typical target users of DPY are crypto-token and blockchain veterans. No U.S. citizens, permanent residents, or green card holders are allowed to participate in the DPY crowdsale, thus the Delphy 5.8 Governance Policies Foundation will not sell DPY to the foregoing persons. The Delphy Foundation will use proceeds from the sale of DPY The prediction market can help all organizations maximize the at its own discretion, which include expenses for technical efficiency of its human resources. It helps pool the knowledge, development, marketing, compliance, financial audit, business wisdom and experience of all stakeholders, enhance the overall development, etc. competitiveness of the organization, and provide a channel for all Delphy contains a completely decentralized prediction market employees to express themselves and contribute to the development on top of Ethereum. Anyone around the world can access, free of of the organization. More importantly, it improves the sense of geographical restrictions, the inherent functions of Delphy by, and participation, which means a lot to the Millennial Generation. only by, consuming DPY. The Delphy platform has neither a Therefore, a prediction market within the organization can help physical presence nor association with the territory or fiat currency of managers and administrators better understand employees’ ideas and any country or region. Nevertheless, regulatory authorities in guide the organization’s operation. various countries around the world may confront Delphy with For example, Microsoft once used a prediction market to interrogatories and supervision. To satisfy and comply with the local forecast whether a product would be delivered on time. Within the laws and regulations, the Delphy platform may be out of service in first three minutes of the transaction, the price of “on time” went certain jurisdictions. The Delphy Foundation and its team will down, meaning that participants had no faith in the product being endeavor to seek a “sandbox policy” or safe harbor treatment to delivered on time. The project manager held a meeting to discuss allow Delphy to better serve the users. how to solve the delay problem, and the price went back up. Ultimately, the product was not delivered on time because end users 6.2 Disclaimers were not satisfied with some of its performance. This example shows that a prediction market, by collecting all The Delphy Foundation does not make, and hereby disclaims, kinds of information, can help refine the governing policies inside an any representation or warranty with respect to Delphy or DPY (such organization. as merchantability or fitness for particular purposes), except those Microsoft is not the only company that has deployed a expressly specified herein. Each purchaser’s decision to participate in prediction market. For the past ten years, many Fortune 500 the DPY crowdsale and purchase any DPY shall be made based on companies, including HP, Best Buy, General Electric, Google and his/her own knowledge of Delphy and DPY and the information IBM, have been doing the same thing. disclosed in this Whitepaper. Without prejudice to the generality of Economist David Rothschild believes that using prediction the foregoing, each purchaser will, upon the launch of Delphy, accept markets in business decisions has two purposes. One is to inform DPY on an “as is” basis, irrespective of the technical specifications, participants what may happen in the future so that they can collect parameters, performance or function thereof. information and resources more efficiently, and the other is to make them know how the various factors affect prediction results. The Delphy Foundation hereby expressly disclaims its liability, In addition, prediction markets also help organizations more and shall in no case be liable to any person, for: effectively manage economic and social risks, such as a decline in consumer demand, disease outbreaks and epidemics, and environmental disasters. (1) any person’s purchase of DPY in violation of any anti-money laundering, counter-terrorism financing or other regulatory requirements that are imposed in any jurisdiction;

Delphy Foundation: Revolutionary Platform for Predicting Future Events (2) any person’s purchase of DPY in violation of any Delphy is at the stage of development as of the date of this representation, warranty, obligation, covenant or other Whitepaper and its philosophy, consensus mechanism, algorithm, provision under this Whitepaper, and the resulting failure code and other technical specifications and parameters could be or inability to make his/her payment or to claim relevant updated and changed frequently and constantly. While this purchased DPY; Whitepaper has contained the then up-to-date key information of (3) early termination of the DPY crowdsale for any reason; Delphy, it is not absolutely complete and is subject to adjustments (4) failure or abortion of Delphy development and resulting failure and updates that the Delphy Foundation might make from time to to deliver DPY; time for certain purposes. The Delphy Foundation is not in a position, (5) delay or rescheduling of Delphy development and resulting nor obliged, to keep the purchasers closely posted on every detail of failure to meet any anticipated milestone; Delphy development (including its progress and expected milestones (6) any error, bug, flaw, defect or otherwise of the source code of no matter whether rescheduled or not) and therefore will not Delphy; necessarily provide the purchasers with timely and full access to all (7) any malfunction, breakdown, collapse, rollback or hard fork of the information relating to Delphy that may emerge from time to Delphy or the blockchain of Ethereum; time. The insufficiency of information disclosure is inevitable and (8) failure of Delphy or DPY to meet any specific purpose, or reasonable. unfitness for any specific use; (9) utilization of the proceeds raised through the DPY crowdsale; (3) Regulatory Measures (10) failure to timely and completely disclose any information Crypto-tokens are being, or may be, overseen by the regulatory relating to the development of Delphy; authorities of various jurisdictions. The Delphy Foundation may (11) any purchaser’s divulgence, loss or destruction of the receive queries, notices, warnings, requests or rulings from one or private key of his/her crypto-currency or crypto-token more regulatory authorities from time to time, or may even be wallet (inter alia, the private key of the Delphy wallet used ordered to suspend or discontinue any action in connection with the by that purchaser); Campaign, Delphy’s development or DPY. The development, (12) any default, breach, infringement, breakdown, collapse, marketing, promotion or otherwise of Delphy or the DPY crowdsale service suspension or interruption, fraud, mishandling, campaign may be seriously affected, hindered or terminated as a misconduct, malpractice, negligence, bankruptcy, result. And since regulatory policies could change from time to time, insolvency, dissolution or winding-up of any third party existing regulatory permission or tolerance on Delphy or the DPY crowdfunding portal of DPY; crowdsale campaign in any jurisdiction could be just temporary. (13) any difference, conflict or contradiction between this DPY could be defined from time to time as virtual commodity, Whitepaper and an agreement between any purchaser and digital asset or even securities or currency in various jurisdictions any third party crowdfunding portal; and therefore could be prohibited from being traded or held in certain (14) trading or speculation of DPY by any person; jurisdictions pursuant to local regulatory requirements. (15) listing or delisting of DPY on or from any exchange; (16) DPY being classified or treated by any government, (4) Cryptography quasi-government, authority or public body as a kind of Cryptography is evolving and cannot guarantee absolute security at currency, securities, commercial paper, negotiable all times. Advances in cryptography, such as code cracking, or instrument, investment or otherwise that may be banned, technical advances such as the development of quantum computers, regulated or subject to certain legal restrictions; could present risks to all cryptography-based systems including (17) any risk factors disclosed in this Whitepaper and any Delphy. This could result in the theft, loss, disappearance, damage, loss, claim, liability, punishment, cost or other destruction or devaluation of the DPY held by any person. To a adverse impact that is caused by, associated with, in reasonable extent, the Delphy Foundation will be prepared to take connection with, incidental to or consequential to that risk proactive or remedial steps to update the protocol underlying Delphy factor. in response to any advances in cryptography and to incorporate additional reasonable security measures where appropriate The future 6.3 Risk Factors of cryptography or security innovations is unpredictable while the Delphy Foundation will try its best to accommodate the continuing The Delphy Foundation believes that there are numerous risks changes in the domains of cryptography and security. involved in the development, maintenance and running of Delphy, many of which are beyond the control of the Delphy Foundation. (5) Development Failure or Abortion Each DPY purchaser should peruse, comprehend and consider Delphy is still in the process of development, rather than a finished carefully the risks described below in addition to the other product ready to launch. Due to the technological complexity of the information stated herein before deciding to participate in the DPY Delphy system, the Delphy Foundation could be faced with crowdsale campaign. unforeseeable and/or insurmountable difficulties from time to time. Accordingly, the development of Delphy could fail or abort at any Each DPY purchaser should pay particular attention to the fact time for any cause (including insufficiency of funds). The that, while the Delphy Foundation is established in the Republic of development failure or abortion would result in non-availability of Singapore, Delphy and DPY lie in cyberspace only without physical the purchased DPY for Crowdsale to any purchaser. presence and hence do not fall within or pertain to any specific jurisdiction. (6) Theft of Crowdsale Proceeds There may be attempts to steal the crowdsale proceeds received by the Delphy Foundation (including the fiat currency amount converted Participating in the DPY crowdsale campaign shall be an action therefrom). Such a theft or attempted theft may affect the ability of based upon prudent decision and will be deemed as the relevant DPY the Delphy Foundation to fund the development of Delphy. While purchaser having been fully aware of and agreed to take all the risks the Delphy Foundation will adopt cutting-edge technical solutions to below. keep the crowdsale proceeds safe, certain cyber thefts could be hardly unpreventable. (1) Termination of the Campaign The DPY crowdsale campaign may be early terminated, in case of (7) Flaws in Source Code which a purchaser may only be refunded with part of his/her payment Nobody can guarantee the source code of Delphy to be flaw-free. It as a result of the Bitcoin / Ether price volatility and/or the expenses may contain certain flaws, errors, defects and bugs, which may incurred by the Delphy Foundation. disable some functionality for users, expose users’ information or otherwise. Such flaws, if any, would compromise the usability, (2) Insufficient Information Availability stability, and/or security of Delphy and consequently bring adverse

Delphy Foundation: Revolutionary Platform for Predicting Future Events impact on the value of DPY. Open source codes rely on transparency same through the purchaser’s registered email or registered account, to promote community-sourced identification and solution of which sending is not revocable or reversible. Each DPY purchaser problems within the code. The Delphy Foundation will work closely shall take care of the security of his/her registered email and together with the Delphy community to keep improving, optimizing registered account throughout by taking such actions as: (i) using a and perfecting the source code of Delphy onwards. highly secure password; (ii) refraining from opening or responding to any scam emails; and (iii) keeping strictly confidential all the secret (8) Unpermissioned, Decentralized and Autonomous Ledger or personal information about himself/herself. There are three prevailing categories of distributed ledger adopted among the contemporary blockchain projects, namely, (14) Private Key of DPY Wallet unpermissioned ledger, consortium ledger and private ledger. The loss or destruction of a private key required to access DPY may Delphy’s underlying distributed ledger is an unpermissioned one, be irreversible. DPY are controllable only by possessing both the which means it is publicly accessible and useable to everyone on a relevant unique public and private keys through the local or online permission-free basis. While Delphy is initially developed by the DPY wallet. Each purchaser is required to safeguard the private keys Delphy Foundation, it is not owned, operated or otherwise controlled contained in his/her own DPY wallet(s). Where such private key of a by the Delphy Foundation. The community of Delphy, which is DPY purchaser is lost, missing, divulged, destroyed or otherwise spontaneously formed and is open, decentralized and admission-free compromised, neither the Delphy Foundation nor anyone else will be to join, is composed of users, fans, developers, DPY holders and able to help the purchaser access or retrieve the related DPY. other participants worldwide who are mostly not connected with the Delphy Foundation in any manner. Such a community will be (15) Inflation decentralized and autonomous as to the maintenance, governance and Subject to the specific underlying protocol at the launch of Delphy, even evolution of Delphy while the Delphy Foundation will merely the total quantity of DPY may slightly increase over time, and could be an active player in the community peer to others without supreme further increase because of the adoption of a patch or upgrade of or arbitrary authority, irrespective of its earlier efforts and Delphy source code. The resulting inflation of DPY supply could contributions to the genesis of Delphy. As a result, it is not at the lead to the drop of market price, and consequently DPY holders mercy of the Delphy Foundation how Delphy would be governed or (including the purchasers) could suffer economic losses. It is not evolve after the Launch. guaranteed that a purchaser or DPY holder would be compensated or made good somehow for the DPY inflation. (9) Update of Source Code The source code of Delphy is open and could be updated, amended, (16) Popularity altered or modified from time to time by any member of the The value of DPY hinges heavily on the popularity of the Delphy community of Delphy. Nobody is able to foresee or guarantee the system. Delphy is not expected to be popular, prevalent or widely precise result of an update, amendment, alteration or modification. used soon after the Launch. The worst-case scenario is that Delphy As a result, any update, amendment, alteration or modification could may even remain marginalized in the long run, appealing to only a lead to an unexpected or unintended outcome that adversely affects minimal portion of the users. By contrast, a significant portion of Delphy’s operation or DPY’s value. DPY demand could be of speculative nature. The lack of users may result in increasing volatility of DPY market price and consequently (10) Security Weakness compromise Delphy’s long-term development. The Delphy The blockchain of Delphy rests on open-source software and is an Foundation will not (nor has the responsibility to) stabilize or unpermissioned distributed ledger. Regardless of the Delphy otherwise affect DPY’s market price if there is any such price. Foundation’s effort to keep the Delphy system secure, anyone may intentionally or unintentionally introduce weaknesses or bugs into the (17) Liquidity core infrastructural elements of Delphy which the security measures DPY is not a currency issued by any individual, entity, central bank adopted by the Delphy Foundation is unable to prevent or remedy. or national, supra-national or quasi-national organization, nor is it This may consequently result in the loss of DPY or any other digital backed by any hard assets or other credit. The circulation and trading tokens held by a purchaser. of DPY on the market are not what the Delphy Foundation is responsible for or pursues. Trading of DPY merely depends on the (11) “Distributed Denial of Service” Attack consensus on its value between the relevant market participants. The Ethereum is designed to be public and unpermissioned and Nobody is obliged to redeem or purchase any DPY from any DPY therefore may suffer cyber-attacks of “distributed denial of service” holder (including the purchasers). Nor does anyone guarantee the from time to time. Such attacks will adversely affect, stagnate or liquidity or market price of DPY to any extent at any time. To divest paralyze the network of the Delphy system and accordingly render his/her DPY, a DPY holder would have to locate one or more willing the transactions thereon delayed to be recorded or included in the buyers to purchase the same at a mutually agreed price, which blocks of the Ethereum blockchain or even temporarily unable to be attempt could be costly and time-consuming and does not necessarily performed. bear fruit. And there could be no crypto-currency exchange or other marketplace having DPY listed thereon for trading. (12) Insufficiency of Processing Power The rapid growth of Delphy will be accompanied by a surge of (18) Price Volatility transaction numbers and demand of processing power. If the demand Cryptographic tokens, if traded on public markets, usually have of processing power outgrows how much the nodes of the Ethereum extremely volatile prices. Fluctuations in price over short periods of blockchain network can then provide, the network of Delphy could time frequently occur, which price may be denominated in Bitcoin, be destabilized and/or stagnated, and there could be fraudulent or Ether, US Dollars or any other fiat currency. Such fluctuations could false transactions such as “double-spending” to arise. In the result from market forces (including speculations), regulatory worst-case scenario, the DPY held by the purchasers could be lost, changes, technical innovations, availability of exchanges and other and rollback or even hardforking of the blockchain of the Ethereum objective factors and represent changes in the balance of supply and could be triggered. All these aftermaths would do harm to the demand. The Delphy Foundation is not responsible for any secondary usability, stability and security of Delphy and the value of DPY. market trading of DPY no matter whether or not there would be such markets for DPY. Therefore, the Delphy Foundation neither is (13) Unauthorized Claim of DPY for Crowdsale obliged to tame the price volatility of DPY nor cares about that. The Any person who gains access to the DPY purchaser’s registered risks associated with DPY trading price have to be taken by the DPY email or registered account by deciphering or cracking the traders themselves. purchaser’s password will be able to claim the purchased DPY for Crowdsale in bad faith. As such, the relevant purchased DPY for (19) Competition Crowdsale may be missent to the person whomever claims that the

Delphy Foundation: Revolutionary Platform for Predicting Future Events Delphy’s underlying protocol is based on an open-source computer [6] Mann, Adam. (2016). The Power of Prediction Markets. Nature, software such that nobody claims copyright or any other type of Vol. 538, Issue 7625. intellectual property right of the source code. As a result, anyone can [7] Kambil, Ajit. (Mar/Apr 2011). Predictive Markets: Predicting legally copy, replicate, reproduce, engineer, modify, upgrade, the Rise of Prediction Markets. Analytics Magazine. improve, recode, reprogram or otherwise utilize the source code [8] Rice, Andrew. (2014). The Fall of Intrade and the Business of and/or underlying protocol of Delphy in an attempt to develop a Betting on Real Life. Buzzfeed. competing protocol, software, system or virtual platform or virtual machine, which is out of the Delphy Foundation’s control and may [9] Yeh, Puong Fei. (2006). Using Prediction Markets to Enhance consequently compete with or even overshadow or overtake Delphy. US Intelligence Capabilities. Besides, there have been and will be various competing [10] Hanson, Robin. (2007). The Policy Analysis Market - A blockchain-based platforms that compete with Delphy. The Delphy Thwarted Experiment in the Use of Prediction Markets for Foundation will in no case be capable of eliminating, preventing, Public Policy. Innovations: Technology, Governance, restricting or minimizing such competing efforts that aim to contest Globalization , 73-88. with or overtake Delphy. [11] Gelman, Andrew. (2016). Something’s Odd About the Political Betting Markets. Slate. [12] de la Rouviere, Simon. (2015). Why & How Decentralized 8~ Team Prediction Markets Will Change Just About Everything. Medium. 8.1 Core Team [13] Hanson, R. (2003). Combinatorial Information Market Design Bo Wang: Founder [J]. Information Systems Frontiers, 5(1), 107-119. Master Degree of Information Economics from Michigan University, [14] Hanson, R. (2009). Logarithmic Market Scoring Rules for Bachelor Degree of Information Management from Peking Modular Combinatorial Information Aggregation [J]. Journal University. Blockchain entrepreneur and technical expert. of Prediction Markets, 1(1), 3-15. Co-founder of Factom and Wanglutech, which brings Blockchain [15] Arrow, K. J., Forsythe, R., Gorham, M., et al. (2008). The technology to a greater range of applications. Promise of Prediction Markets [J], Science Magazine, 320(5878), 877-8. Fox Holt: VP of Business Development [16] Hanson, R., Oprea, R. (2009). A Manipulator Can Aid MBA from Cornell University, double-degree of Computer Science Prediction Market Accuracy [J]. Economica, 76(302), and Economics from Centre College. Held leadership roles’ in GE, 304–314. Morgan Stanley, and founder and CEO of Orthogonal Inc and [17] Pennock, D. (2006). Implementing Hanson’s Market Maker. Torque Tech Capital. Almost 20 years of experience in diverse range of industries and markets ranging in size from start-ups to Market-maker/ multinational organizations. [18] Wolfers, J., & Zitzewitz, E. (2006). Interpreting Prediction Market Prices as Probabilities. Social Science Electronic Mike Li: Product Managing Director Publishing. Founder and lead developer of JUZI Browser, ranked No. 6 among [19] Hanson, R. (2013). Shall We Vote on Values, But Bet on all internet browsers in China. More than 10 years of experience in Beliefs?, Journal of Political Philosophy, 151-178. developing and product operation management. Original member of [20] David P., Cary D. (2013), Prediction Markets in the Laboratory. early Qihu 360. Journal of Economic Surveys, 589-603. [21] 郑伟 (2008), 地震保险:国际经验与中国思路, 保险研究, Jane Zhang: Marketing Partner 9-14. 10 years experience in Internet and Venture Capital. Unique combination of marketing, financial and technical work experience in [22] 万国华 , 李铭(2016): 我国二元期权交易的法律规制路径研 究, 金融监管研究 , 34-50. China. Creation Ventures, KPCB China, APEC China Business Council, Qihoo 360. Participated in investment project Tantan. [23] 张宁 , 李国秋(2016). 企业内部运行的预测市场研究 竞争 情报 , 52-58. [24] 童振源,林馨怡 (2008). 台湾选举市场预测. 预测市场的运 8.2 Council and Advisory Board 用与实证分析, 选举研究, 131-166. Bo Shen: Founder of Fenbushi Capital [25] James Gong: Founder of [26] Roland Sun: Partner of Broad & Bright Gang Wu: Founder of [27] [28] 9~ Bibliography [29] [1] Ethereum Whitepaper: [30] [31] [2] TruthCoin Whitepaper: [32] [3] Augur Whitepaper: ntralized-Open-Source-Platform-for-Prediction-Markets.pdf [4] Gnosis Whitepaper: f [5] Protess, Ben. Intrade Bars U.S. Bettors after Regulatory Action.