@auryn_macmillan, as I understand your suggestion, we create an “index” for two reasons:
- There might be things GnosisDAO want to achieve not reflected by the GNO/USD exchange rate
- It’s possible to construct an index so that it is easier to figure out how some particular thing (e.g. transaction volume) impacts it than how transaction volume impacts the GNO/USD exchange rate
I think 1 is an excellent reason to substitute a composite index for the GNO/USD exchange, but I’m nos so sure about 2. My intuition here is that you probably lose something by substituting an endpoint that represents “what you really want” but is hard to calculate for one that maybe doesn’t represent what you really want but at least you can calculate it. Maybe an index constructed to satisfy 1 would serendipitously satisfy 2, but my feeling is that for the primary outcome we should give “what we really want” much more weight than “easy to calculate”.
Another thought I had: my opening post argued that there can be additional benefits from exposing people’s models publicly, rather than just their outputs, and that creating additional markets can achieve this. However, sometimes models might be very high dimensional and so it’s not feasible to create enough markets to fully expose them - for example, a good model for predicting the price of GNO might take many different inputs and combine them non-linearly, and it’s not a good idea to create hundreds of markets to capture all of the interactions.
For high dimensional models, it might be better to run a competition where we award prizes for the best prediction of the GNO/USD price (or chosen index function) given a set of indicators chosen by GnosisDAO, and run secondary markets in these indicators (ideally there would be a process for adding to the indicator set as well). Also, to be eligible for prizes, models must be be posted publicly. This way we could get some good public models of the high dimensional problem of mapping Secondary Indicators -> Price without having to create hundreds of markets. Then anyone wanting to forecast the impact of a decision on price can forecast the impact on secondary indicators and run it through the model.
The relationship between such models and the primary market to be similar to the relationship between poll aggregators and election betting markets. Betting markets don’t strictly follow poll aggregators, but poll aggregators still give everyone betting a good synthesis of what polling information says about the election outcome. If there were no public aggregators, bettors on political markets would either have to bet while being relatively ignorant of what the polls suggests about the outcome + uncertainty, or they would have to expend substantial effort creating their own poll aggregator. This effort would be duplicated across many bettors.