Vitalik Buterin defends Polymarket’s controversial Hezbollah prediction markets

Buterin warned against situations where market acts as a primary incentive for harmful actions.

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Ethereum co-founder Vitalik Buterin has defended the inclusion of a Hezbollah betting section on Polymarket, a decentralized prediction platform.

In an Oct. 1 post on X, Buterin pointed out that many individuals, including elites, make harmful and inaccurate predictions about conflicts on platforms like Twitter.

He argued that knowing whether people with a financial stake believe an event has a 2% or 50% chance of happening offers valuable insight. This, he believes, helps maintain rationality in the face of misinformation.

According to him:

“It’s not about ‘[making] money from bad stuff happening,’ it’s about creating an environment where speech has consequences (so both unjustified fearmongering and unjustified complacency are punished), without relying on governmental or corporate censors.”

Polymarket’s Hezbollah-related markets allow users to bet on events like whether Israel will invade Lebanon within specific timeframes, if a ceasefire will occur, or if the US military will intervene this year. As of press time, these markets have seen over $7 million in trading volume.

‘Soft caps’

Meanwhile, Chainlink community liaison Zach Rynes raised concerns about the potential dangers of prediction markets, particularly around assassination bets. He suggested that large, influenceable markets could incentivize real-life actions aimed at manipulating outcomes.

Buterin responded that he opposes such markets. He stated that he draws the line at situations where a market acts as a primary incentive for harmful actions, enabling insider trading.

Rynes, however, highlighted that any prediction market on influenceable events could incentivize harmful actions if enough liquidity is involved.

“Even if it wasn’t the original intention, highly liquid markets could subsidize war,” Rynes argued. “Prediction markets aren’t passive observers—they can influence outcomes when they scale.”

In reply, Buterin proposed introducing soft caps on market sizes for platforms like Polymarket. He suggested implementing a fee structure that increases as market size approaches the cap, with all proceeds used to support socially beneficial markets with low organic volume.

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