Ethereum co-founder Vitalik Buterin has expressed concern over the current state of prediction markets. He believes that the increasing reliance on uninformed speculators threatens the sector's viability.

Recently I have been starting to worry about the state of prediction markets, in their current form. They have achieved a certain level of success: market volume is high enough to make meaningful bets and have a full-time job as a trader, and they often prove useful as a…

— vitalik.eth (@VitalikButerin) February 14, 2026

"Prediction markets seem to be increasingly sliding into an unhealthy model: they focus on short-term bets on cryptocurrency prices, sports wagers, and other things that provide only momentary dopamine hits, but lack long-term value or societal benefit," the programmer wrote.

Buterin categorized market participants into "smart traders," who profit from information, and "losers," who absorb losses. He primarily associated the latter group with retail investors.

Platforms dependent on this dynamic risk creating communities that encourage uninformed trading.

"There is nothing inherently immoral about taking money from people with foolish opinions. But there is something fundamentally 'cursed' about relying too heavily on that," he noted.

AI Personalization and Moving Away from Stablecoins

To address this issue, Buterin proposed a new architecture: prediction markets should become hedging tools tied to regional price indices of goods and services.

The concept suggests that users would deploy local language models. These neural networks would analyze individual consumer habits and create a portfolio of bets that offsets rising prices for essential goods.

The Ethereum co-founder also suggested that such markets could be denominated in income-generating assets. This would pave the way for a complete move away from stablecoins tied to fiat currencies.

"We don’t need fiat currencies at all! People can hold stocks, ETH, or something else for wealth growth, and use personalized shares of prediction markets for stability," he stated.

Buterin's stance aligns with his recent comments on DeFi's dependence on the dollar. The programmer believes the industry should abandon fiat currency as a unit of account—"stablecoins" should be based on generalized broad market indices.

Recall that at the end of December, the Ethereum co-founder called prediction platforms a filter against fake news and panic.