Once a prediction market becomes large enough, it transitions from being truth-seeking to being tautology-seeking.

It's worth noting that we already have a term for continuous-valued prediction markets: cash-settled futures.

They're approximately impossible to hedge, so liquidity providers hate them. Liquidity providers try to minimize risk. With a contract that settles to a continuous number, you can almost always find an instrument (usually the underyling security the derivative settles to) to hedge your risk. This makes providing liquidity relatively safe, so more... See more

People doing -EV trades, willingly, because those trades are positive utility for them. What's great is that they're positive utility for the other side too because the two sides have different risk preferences.

ES trades so much because people use it to hedge. They're transferring risk they don't want, and they're perfectly willing to pay a (small) price for the service the market provides.