Skip to content

Friend Group Market Safety Guide

⚠️ IMPORTANT SAFETY WARNINGS

Smart Contract Risks

READ CAREFULLY BEFORE CREATING OR PARTICIPATING IN FRIEND MARKETS

When you create or join a friend group prediction market, you are interacting with a smart contract on the blockchain. It is critical that you understand the following:

1. No One Controls the Outcome

  • Neither you, your friends, nor FairWins can control or reverse the outcome of a smart contract once it's deployed
  • The contract operates autonomously based on the code and oracle results
  • This is irreversible - funds sent to smart contracts cannot be recovered except through the normal resolution process
  • Smart contracts are permanent - they cannot be deleted or "taken back"

2. You Are Responsible

  • USE AT YOUR OWN RISK - You are solely responsible for:
  • Verifying who you are betting with
  • Understanding the bet terms
  • Ensuring the arbitrator (if any) is trustworthy
  • Reading and understanding the contract parameters
  • Do your due diligence before committing funds
  • Start with small amounts until you trust the system

3. This Is Real Money

  • All bets use real cryptocurrency (ETH/ETC)
  • You can lose all funds you commit
  • Only bet what you can afford to lose
  • Friend markets are not FDIC insured or backed by any institution

4. Arbitration Limits

While friend markets support optional arbitrators: - Arbitrators are chosen by you - not vetted by FairWins - Arbitrators may be biased, unavailable, or dishonest - No legal recourse if arbitration goes wrong - For important bets, consider using: - Public markets with established oracles - Pegged markets that settle based on public outcomes - Multiple trusted arbitrators

🚨 How to Spot Scams

Friend markets open new possibilities but also new risks. Here's how to protect yourself:

Red Flags - DO NOT PARTICIPATE if you see these:

❌ Suspicious Participants

  • Unknown addresses - Don't bet with people you can't identify
  • New accounts - Be wary of accounts with no history
  • Pressure tactics - "Act now!" or "Limited time!" are manipulation
  • Too good to be true - If odds seem unrealistic, they probably are

❌ Bad Market Setup

  • Vague terms - Resolution criteria must be crystal clear
  • Unfair arbitrator - Never use an arbitrator who:
  • Is one of the participants
  • Has a stake in the outcome
  • You don't know personally
  • Has a history of bias
  • No arbitrator when needed - Complex bets need neutral resolution
  • Unrealistic pegging - Market pegged to non-existent public markets

❌ Communication Red Flags

  • Contact only through DMs or off-platform
  • Unwillingness to use public verified contracts
  • Requests to send funds outside the platform
  • Promises of "guaranteed" returns
  • Claims that someone else will "handle" the resolution

Common Scam Patterns

1. The Fake Arbitrator Scam

  • Scammer creates market with their own address as "arbitrator"
  • Outcome is predetermined in scammer's favor
  • Protection: Never accept a participant as arbitrator

2. The Disappearing Act

  • After taking bets, the creator disappears
  • No resolution ever happens
  • Protection: Only bet with known, trusted friends

3. The Ambiguous Outcome

  • Market terms are intentionally vague
  • Multiple interpretations possible
  • Scammer argues for favorable interpretation
  • Protection: Insist on crystal-clear, objective resolution criteria

4. The Pump and Dump

  • Create excitement around a market
  • Get others to add liquidity
  • Manipulate or abandon the market
  • Protection: Stick to small friend groups you know

5. The Sybil Attack

  • One person controls multiple accounts
  • Pretends to be different "friends"
  • Manipulates the market
  • Protection: Verify identities through multiple channels

✅ Best Practices for Safe Friend Markets

Before Creating a Market

  1. Know Your Participants
  2. Only create markets with people you know and trust in real life
  3. Verify identities through video call, social media, or in-person

  4. Use established reputation if available

  5. Define Clear Terms

  6. Write specific, measurable resolution criteria
  7. Include exact dates and times
  8. Define what evidence is acceptable
  9. Example (Good): "Bitcoin closes above $50,000 on CoinMarketCap at 11:59 PM UTC on Dec 31, 2024"

  10. Example (Bad): "Bitcoin will moon soon"

  11. Choose Arbitration Wisely

  12. For 1v1 bets, consider:
    • A mutual friend both parties trust
    • A public oracle/data source
    • Pegging to an established public market

  13. For group bets:

    • Use consensus (majority rules)
    • Public data sources when possible
    • Established prediction markets

  14. Consider Market Pegging

  15. Safest option: Peg your friend market to a public market
  16. Automatic settlement based on established oracle
  17. No arbitrator needed
  18. Resolution is transparent and verifiable

When Joining a Market

  1. Review Everything
  2. ✅ Check who created it
  3. ✅ Verify all participants
  4. ✅ Read resolution criteria carefully
  5. ✅ Check the arbitrator (if any)
  6. ✅ Verify if pegged to public market

  7. ✅ Check expiration dates

  8. Verify the Contract

  9. Review market parameters on blockchain
  10. Check member limits are enforced
  11. Verify fee amounts

  12. Confirm addresses match expected values

  13. Start Small

  14. First time with new friends? Use small amounts
  15. Test the resolution process

  16. Build trust gradually

  17. Use Ragequit Protection

  18. Friend markets integrate with ragequit modules
  19. You can exit with proportional share if you disagree
  20. Understand the ragequit terms before joining

🛡️ Technical Protections Built-In

Friend markets include several protections:

Member Limits

  • 1v1 markets: Exactly 2 participants (prevents group manipulation)
  • Small groups: Maximum 10 members (prevents becoming unofficial public market)
  • Event tracking: 3-10 players (appropriate for competitive events)

Reduced Costs

  • 1v1: 0.05 ETH creation fee (vs 1 ETH for public)
  • Friend groups: 0.1 ETH creation fee
  • Lower barrier while maintaining spam prevention

Market Pegging

  • Automatic settlement: Peg to established public markets
  • No arbitrator needed: Resolution is automatic
  • Transparent: Based on public oracle results

Ragequit Protection

  • Exit option: Leave with proportional treasury share
  • Minority protection: Don't like the outcome? You can leave
  • Fair distribution: Based on token holdings

📞 If Something Goes Wrong

What FairWins CAN Do:

  • Provide platform support and guidance
  • Help you understand contract parameters
  • Assist with technical issues
  • Improve platform based on feedback

What FairWins CANNOT Do:

  • ❌ Reverse or cancel smart contract transactions
  • ❌ Force arbitrators to rule fairly
  • ❌ Recover funds from scams
  • ❌ Control market outcomes
  • ❌ Mediate disputes between participants

If You Suspect a Scam:

  1. Do not send any more funds
  2. Document everything (screenshots, transaction IDs)
  3. Report to FairWins (we track patterns to warn others)
  4. Warn your friends (prevent others from falling victim)
  5. Consider legal action if amounts are significant
  • Smart contracts may have different legal status in different jurisdictions
  • Betting/gambling laws vary by location
  • You are responsible for complying with local laws
  • FairWins is a technology platform, not a gambling operator
  • Consult legal advice for significant disputes

✅ Good Use Cases for Friend Markets:

  1. Friendly Wagers with Known Friends
  2. "Who will win our fantasy football league?"
  3. "Will it snow on Christmas in our hometown?"

  4. "Who scores more points in tonight's game?"

  5. Event Tracking

  6. Track buy-ins and payouts
  7. Transparent accounting

  8. Automatic settlement

  9. Group Predictions

  10. Office pools
  11. Family bet pools

  12. Small community predictions

  13. Learning and Practice

  14. Practice prediction market mechanics with friends
  15. Small amounts to understand the system
  16. Test strategies in low-stakes environment

❌ Inappropriate Use Cases:

  1. High-Stakes Betting
  2. Use established public markets instead
  3. Better liquidity and oracles

  4. More protection and oversight

  5. Unknown Participants

  6. Don't bet with strangers
  7. Use public markets for that

  8. Friend markets require trust

  9. Illegal Activities

  10. Comply with local gambling laws
  11. No markets on illegal activities

  12. Platform will cooperate with law enforcement

  13. Market Manipulation

  14. Don't create fake "friend" markets
  15. No pump-and-dump schemes
  16. Platform monitors for abuse

Summary

Remember:

  • ⚠️ Smart contracts are irreversible
  • 🚫 No one controls outcomes (not even FairWins)
  • 💰 Use at your own risk
  • 👥 Only bet with trusted friends
  • 📝 Clear terms prevent disputes
  • 🔗 Consider market pegging for safety
  • 🚨 Watch for scam red flags
  • 🤏 Start small and build trust

Key Safety Steps:

  1. ✅ Verify all participants
  2. ✅ Read terms carefully
  3. ✅ Check arbitrator credentials
  4. ✅ Consider market pegging
  5. ✅ Start with small amounts
  6. ✅ Trust your instincts

When in doubt, don't participate.

Additional Resources

Questions? Contact [email protected] (but remember: we cannot reverse smart contracts!)