Rain Protocol: How to Calculate Predictions in a Decentralized Way

If you are wondering how to make accurate predictions about future events, Rain Protocol offers a revolutionary solution. This protocol transforms decentralized prediction markets into reality, where anyone can create markets for nearly any event and have collective intelligence compute the forecasts.

Revolutionizing Prediction Markets: Rain’s Approach

Traditional prediction platforms were limited to major political elections or sporting events. Rain Protocol breaks this boundary. Its goal is to create a universal layer where any non-profit organization, developer, or community can operate their own prediction markets without barriers—whether they concern global economic trends or local community events.

Three Ways Rain Protocol Makes Predictions Quantifiable

Continuous Pricing Through Automated Systems

Rain has adopted an automated market maker (AMM) model that provides equal participation opportunities for everyone. Liquidity never runs out because buying and selling are possible at any time. The price of each “yes” or “no” share directly reflects the collective market opinion. If 60% of participants are on the “yes” side, each “yes” share is valued at $0.60—making the system transparent and dynamic.

Calculating potential profit is also straightforward: if someone buys a share at $0.20 and it turns out correct, they receive a $1 return (5x profit). This mechanism turns prediction into not just an opinion but a valuable economic asset.

Balancing Artificial Intelligence and Human Judgment

Rain Protocol employs a multi-layered system to determine outcomes. An AI oracle named Delphi (operated by Olympus AI) analyzes web data to provide objective decisions. But if participants find a result questionable, they can challenge it.

Dispute resolution first goes to Lex (an AI judge), and if necessary, to a human oracle panel for a final decision. This hybrid system eliminates trust issues and ensures that prediction calculations remain fair and transparent.

Sustainable Economy That Rewards All

All markets incur a 5% fee on trades, fueling the ecosystem:

• 2.5% distributed to active participants: 1.2% to market makers, 1.2% to liquidity providers, and 0.1% to outcome setters.
• 2.5% used to buy and burn $RAIN: creating a deflationary pressure that naturally reduces token supply as protocol usage increases.

This structure ensures that prediction markets are not just guessing games—they are an economy where every participant benefits from the protocol’s growth.

$RAIN Token: The Key to Participating in Predictions

$RAIN tokens (currently on Arbitrum) serve three vital purposes:

First: Unlock Trading Power
To participate in prediction markets on Rain, you need to hold $RAIN in your wallet. About $1 worth of $RAIN can enable you to make predictions worth up to $100—an effective 1:100 ratio. This mechanism ensures alignment of interests among all participants.

Second: Governance and Control
$RAIN holders govern the future of the protocol through the Rain DAO. They can vote on fee structures, oracle systems, treasury use, and new features.

Third: Value Appreciation
As Rain’s usage grows, the 2.5% buy-and-burn mechanism continually reduces $RAIN supply. Additionally, 10% of burned tokens are re-minted, funding development and innovation.

Building the Future: Rain’s Collective Intelligence Vision

Rain Protocol’s ultimate goal is to become a decentralized prediction layer for the internet. By turning predictions on any event into liquid markets, Rain aims to generate the world’s most accurate, real-time probability data.

Beyond trading, this collective intelligence can assist in better decision-making in business, policy, and innovation. In the future, these markets will not only forecast outcomes but also help shape positive results—where collective intelligence-driven calculations influence every critical decision.