Political bettors are betting hundreds of millions of dollars on expected outcomes in crypto-backed prediction markets: predicting who Vice President Kamala Harris will run with, for example.

MetaDAO takes this idea one step further: its Solana-based governance experience has raised millions of dollars from entrepreneurs who believe outcomes should be determined by prediction markets.

VC giant Paradigm this month led a $2.2 million investment round into MetaDAO’s projects creating governance structures. This structure is called “futarchy”. Advocates believe that market participants tend to make better decisions than politicians.

This investment round comes at a time when the 2024 elections are highlighting prediction markets that are rapidly becoming popular in the crypto world. Market leader Polymarket currently has nearly $90 million in open interest, a record for bettors looking to predict the outcomes of world events, according to data site Dune.

The noise around prediction markets has given MetaDAO an advantage in fundraising, MetaDAO’s founder, whose nickname is Proph3t, noted in an interview with CoinDesk. “I thought that if we view Polymarket as a machine, we should use a ‘right machine’ to make a decision,” he said in his presentation to investors.

Paradigm was founded by Fred Ehrsham, co-founder of crypto exchange Coinbase. The company supports prediction markets, for example, as a way for businesses to hedge political risks. Paradigm will be the single largest holder of META with 3,035 tokens, owning 14.6% of META’s total supply.

According to Proph3t, approximately 30 angel investors purchased an additional 965 META tokens, raising a total of $2,229,950. The futarchy interpretation of MetaDAO focuses on the value of the META token. Whenever the group recommends any action, a “pass” and “failure” market is created where you can speculate on META.

The outcome of the proposal depends on which of these markets results in a higher token price. A recommendation only passes when the META is worth more in the “pass” market than in the “fail” market.

Last month, MetaDAO’s chief “futarchs” (known by the pseudonyms Nallok and Proph3t) offered to sell several million dollars’ worth of META tokens to fund the project’s engineers, office space, and other startup costs.

META traders approved this proposal: in the “pass” market, the price of META rose to $435, while in the “failure” market it remained at $386. The proposal was accepted; Fundraising continued.

MetaDAO offers a different management approach than other crypto projects that define themselves as “decentralized autonomous organizations” (DAO). Most DAOs treat tokens as votes and consider token holders as voters. On MetaDAO, however, anyone with excess money can directly influence an outcome.

The project garnered a lot of attention in the Solana ecosystem at the mtnDAO hacker house event in Salt Lake City in February. He has since become an active supporter of futarchy. MetaDAO works with several Solana-based projects that implement their own prediction market-based systems.

One of its partners, trading platform Drift, uses MetaDAO technology to determine which projects will receive grants from the DRIFT token.

Co-founder Cindy Leow stated that the app was “showing really positive signs”, with one proposal accepted and the other rejected. “This shows that the community has thought very carefully around the spending and management budget,” she said.