I think it’s mainly that it hasn’t been much tried.
And it’s some sort of chicken and the egg problem:
- If you don’t have much traders, providing liquidity is not profitable when you take opportunity costs into account.
- If you don’t have much liquidity, it’s not interesting to trade.
This proposal giving reward to LP would definitely quick-in a lot of prediction markets use-cases if it passes.
We could also have some sort of sponsorship for events which could bring attention to prediction market, mainly e-sports as they are currently under-served by traditional platforms and have lower sponsorship costs (like sponsoring a competitive Age Of Empire 2 tournament having a bunch of prediction markets could be worth it, see here for an idea of how much viewership stats can go).