What Is the Concept of ‘Futarchy’ and How Does It Relate to Governance?

Futarchy is a form of governance where proposals are decided not by voting on the proposal itself, but by betting on the outcome of the proposal using prediction markets. The idea is to "vote on values, bet on beliefs." The community votes on a metric they want to maximize (the value), and then a prediction market is created to bet on whether a specific proposal will achieve that metric.

If the 'YES' market price is higher than the 'NO' market price, the proposal passes. This leverages the wisdom of the crowd and financial incentives to make better decisions.