Binary prediction markets compress continuous probability distributions into yes/no outcomes, discarding variance, skew, and tail information that forecasters naturally produce. functionSPACE analyzes 622 mutually exclusive bracket events on Polymarket and finds that less than half price a coherent probability distribution. The piece argues for continuous market design as the primitive that finally matches how both institutional analysts and prediction market traders actually reason about uncertainty.

Questions whether prediction markets are capturing the right signal. Argues binary yes/no markets flatten complex beliefs into coin flips, losing the precision that separates superforecasters from average predictors. Uses the 2024 French trader whale ($30M moving election odds) and a Vanderbilt study (PredictIt's 93% accuracy vs 67% on high-volume platforms) to argue that more liquidity doesn't mean better signal.

Argues binary event contracts fragment liquidity and flatten beliefs into 1-bit structures—achieving 8-bit resolution requires 256 separate markets. Proposes treating beliefs as vectors over probability distributions on a shared liquidity surface. Traders express full distributions and are rewarded for variance compression (reducing entropy), not just final outcome correctness.

Manifesto arguing binary yes/no prediction markets are incomplete—they flatten nuanced beliefs into coin flips and pay the same whether you were barely right or sharply right. Proposes distribution-native markets that reward precision: pay more for being closer to the actual outcome. Cites 130x volume growth from early 2024 to late 2025 as the category's credibility moment.