Impact Markets
People put money on real-world outcomes they want but don’t expect to happen on their own.
Organizations bet their own money they can make it happen.
Whoever’s right gets paid.
The basic idea
A way for social innovators to bet:
“If our proposal X gets funded, target metric Y will decrease by more than Z% within the first 6 months.”
Funders’ perspective
Just one example:
“Can we get our neighborhood’s total unhoused count down?
Will pay for things that actually work.”
A Disappointing Status Quo
The same example:
San Francisco spends billions every year to reduce homelessness.
Results underwhelming.
Little accountability between spend and outcomes.
Impact Markets
A better way to align incentives.
How It Works
An elegant mechanism:
- 1Demand is decentralized and self-revealing: people fund measurable outcomes they want, not specific approaches
- 2Supply is competitive and credibility-signaled: providers stake their own collateral — paid only if it works, forfeit if not
- 3Pricing is honest: speculators profit from being right on either side
- 4Governments/NGOs optional: helpful to stimulate demand, but not required
This structure naturally generates a financing and insurance ecosystem
Investors and insurers can provide upfront capital and cover provider downside risk.
Incentivizes best analysis for what is most likely to truly work.
What’s the right amount of collateral to stake?
There’s no single right answer. Each side bids, whatever both agree to is great.
It’s an equilibrium between how strongly the market wants the outcome, and how much providers believe their interventions will work.
Start low, adjust to attract more activity.
Zero collateral is a base case.
If there’s interest there, great.
(Like a Social Impact Bond.)
If not, higher staked collateral can attract far more willingness-to-fund.
Social Impact Bonds 2.0
SIBs are close prior art, but these Impact Markets differ in key structural ways:
SIBs: government-initiated, no open market, no provider skin in game
This: permissionless, open market on both sides, provider posts collateral, anyone can fund outcomes
For the technically curious
Hybrid of a performance bond + prediction market. An underexplored structure:
- Provider posts collateral (performance bond)
- Market participants take the “won’t happen” side for profit
- If success: market pays for the impact they wanted, provider gets paid + keeps collateral
- If failure: market profits, provider forfeits collateral
- Provider competition on wager size = credibility/confidence signal
Meant to resolve existing Social Impact Bond frictions:
- Provider has real skin in game → less walking away
- “Philanthropist” role replaced by open market → scales to anyone
- Competition on wager replaces opaque procurement → meritocratic
- Insurance market emerges naturally for providers → sophisticated pricing
Bringing The Concept to Life
Our role: Market maker
- We ask a 1% fee, from whichever side wins.
- We collect & advertise bids, to matchmake both sides
- We make sure resolution criteria is well-defined from the start, & can arbitrate disputed outcomes.
- We are happy to recommend other helpful partners, such as escrow & insurance providers, but these are optional.
Our key incentive is to keep the ecosystem healthy.
We want to keep both sides happy to come back again and again, so we can continue earning our cut long into the future.
Next step
Register a funding bid:
Money only put into escrow once a match is made.