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on Gopher (inofficial)
HTML Visit Hacker News on the Web
COMMENT PAGE FOR:
HTML Uncovering insiders and alpha on Polymarket with AI
justaj wrote 13 hours 16 min ago:
When I went to the main article link [0] (which for some reason was
linked from a Twitter comment), it said "Page is not supported"
It's also not on archive.org Wayback Machine it seems.
So can anyone please copy and paste the article contents here? Thanks.
0:
HTML [1]: http://x.com/i/article/2024235288512569344
theptip wrote 16 hours 49 min ago:
> An interesting question is if agents are much better at querying data
than humans, do we even need the awkwardness of SQL,
Itâs an interesting question, my hunch is that for now
âin-distribution reasoningâ is going to be much more effective than
custom data query APIs. But perhaps not! Iâd read that paper.
vicchenai wrote 16 hours 57 min ago:
The insider vs. lucky forecaster problem is actually tractable
statistically. In equity markets, informed trading detection uses a
combo of signals: order size relative to market depth, timing proximity
to the resolution event, and cross-market correlation (same entity
appearing in related contracts).
For onchain prediction markets specifically, the pseudonymous addresses
are actually more traceable than people assume - you can cluster
wallets by funding source patterns and behavioral timing even when
fresh addresses are used. Sophisticated actors know this and route
through mixers, but most don't bother.
The deeper problem PollardsRho hints at: if known insiders crowd out
calibrated forecasters (who rationally won't participate when they
expect to be adversely selected against), you get a market that's
accurate but thin and fragile. That's the classic adverse selection
death spiral prediction market designers have been trying to solve.
Polymarket's bet-sizing dynamics actually mitigate this somewhat -
insiders can't take all the liquidity without moving price against
themselves.
tamimio wrote 17 hours 49 min ago:
I mean, why is this surprising when you have this
HTML [1]: https://www.reuters.com/investigations/inside-trump-familys-gl...
seydor wrote 20 hours 18 min ago:
In many ways this gambling infatuation is worse than cryptocurrency,
and with possibly more damaging externalities
JKCalhoun wrote 18 hours 19 min ago:
Hmmm... crypto is bad for the planet though.
DennisP wrote 17 hours 59 min ago:
If you're talking about crypto mining, all of the big smart
contract platforms that can run something like Polymarket are
running on proof of stake. Their energy usage is comparable to any
other internet protocol with a similar amount of traffic.
JKCalhoun wrote 3 hours 23 min ago:
Thanks. Proof of work, now proof of stakeâI clearly don't keep
up with crypto mining.
goodquestions wrote 18 hours 38 min ago:
MAnifold also bad
ttul wrote 20 hours 39 min ago:
Trading on non-public information in prediction markets is illegal (in
the United States) if the information was obtained through fraud,
deception, a breach of trustâsuch as compromising a position of
privilegeâor from a confidential government source. For example, if
you work at Google and know that Gemini 3 will be released on a certain
date, trading on that insight is illegal because you are legally
misappropriating your employerâs proprietary information.
Furthermore, even if you did not personally breach a position of
privilege to get the information, executing the trade can still be
prosecuted as federal wire fraud if doing so violates the prediction
platform's terms of service.
However, if you trade on prediction markets using insider information
that was gained WITHOUT fraud, deception, or a breach of trust, then so
long as the market's terms of service allow it, you can go ahead and
trade on that information. Polymarket is a prime example of this:
unlike traditional financial exchanges, its Terms of Service do not
explicitly forbid everyday users from trading on inside information.
Instead, the platform relies on a catch-all rule prohibiting activity
that violates "applicable laws." This means that as long as you
acquired the inside information legallyâwithout hacking, stealing, or
breaching a duty of confidentialityâPolymarket permits you to
capitalize on it, treating your informational advantage as a feature
that ultimately makes the market's odds more accurate.
nubg wrote 19 hours 52 min ago:
Lmao, this user is an AI bot, as he admits in his bio. Frankly, the
many ellipses gave it away, too.
Edit: He removed the passage.
ttul wrote 9 hours 58 min ago:
Which user is an AI bot?
ttul wrote 9 hours 57 min ago:
(I am not a bot, but I definitely use LLMs to help me conduct
research and write well-informed comments here)
nubg wrote 6 hours 35 min ago:
> and write
welp guilty as charged!
yunohn wrote 20 hours 41 min ago:
> it's clear prediction markets like Polymarket incentivize sharing
information
I severely dislike these euphemisms used by prediction market
enthusiasts. What exactly is the value of information like âmost
searched person on Google in year Nâ? Creating 10s of options to
answer this question via gambling on Polymarket/Kalshi does not help
anyone except their fellow degenerates. Heck, even events like âby N
date the USA invade country Xâ also offer no real value, except for
the insider circle to front run their own invasion and profit from it.
Even worse, apparently they provide anonymity and cover to illegal
participants (eg obviously US citizens) just like crypto exchanges like
Binance did.
I truly question the sanity of those who believe that prediction
markets are providing a positive force in this world.
casey2 wrote 7 hours 13 min ago:
Value? The market itself values having Google insiders ("Wow I can
now ask questions about Googles' internal affairs") and Google values
knowledge of leaks.
Aside from those tertiary effects, perhaps people would pay Google to
know this information ahead of time but previously lacked the
coordination to make a deal directly.
I'm sure people with business (plans) in country X question your
sanity too. Markets create value, not postitve force. Only people can
do that.
pigeons wrote 15 hours 5 min ago:
Question the sanity or also could question the ethics.
bertil wrote 20 hours 31 min ago:
I'm very tempted to agree that those markets are not providing a
positive force, given the focus on questions for which a small group
of people know the answer ahead of time. They are not sharing that
information because it is not in their interest, and insiders likely
wonât have a great time for long.
However, there is large value for some people in knowing when a
country will be invaded: if you live there, you know when to leave;
if you are an airline, when to stop scheduling flights there, or, if
a lot of people are in the first group, up until when to schedule
many more flights to get them out. But Iâm positive the invading
army would prefer some kid in a basement didnât make one Lieutenant
General on the committee obscenely rich overnight.
I wished the focused on markets where many people are part of the
decision, like elections. There, the wisdom of the crowds would add
some value.
yunohn wrote 20 hours 25 min ago:
> there is large value for some people in knowing when a country
will be invaded
Are there any examples of people/companies trusting degenerate
gamblers on prediction markets and making real life-changing
decisions?
All the examples Iâve seen are exactly what I started in my
original post - the insider circle opening a massive position on
the right invasion date mere minutes/hours before they actually do
it. This is useful to precisely nobody! And it happens because they
are insiders, who want to avoid risk of exposure. Not to share
their godly wisdom with the world for others benefit.
FergusArgyll wrote 19 hours 14 min ago:
> Are there any examples of people/companies trusting degenerate
gamblers on prediction markets and making real life-changing
decisions?
If "real life-changing decisions" includes deciding to take a
flight based on polymarket placing a low price on war breaking
out, then yes.
I'd also challenge you to outperform "Degenerate gamblers"
nodesocket wrote 1 day ago:
There is 100% insider-trading and manipulation of prediction markets.
It's absurd some of the markets that are created. The most glaring
example was this years super bowl halftime show. They had markets on
songs Bad Bunny would sing, which song he would sing first, etc. You're
telling me the thousands of people who had access to practices and
information would not wager on this?
0x3f wrote 1 day ago:
You can just stand near the stadium during practice and glean this
info. I believe people did exactly that.
coldtea wrote 1 day ago:
>Prediction markets have been called "truth machines" because anyone
who has information missing from the market can profit.
That sounds like "insider trading" machines, or "scam" machines, rather
than truth machines.
testaccount28 wrote 1 day ago:
yes, they allow you to pay people who have information about the
future for that information, in a distributed manner. this is great
if, like many people, you want information about the future.
rfv6723 wrote 12 hours 24 min ago:
Historical records, notably by Herodotus, confirm that the Persian
Empire used gold to bribe Greek Oracles, turning "divine prophecy"
into a psychological warfare tool.
This mirrors a core flaw in Polymarket: profit maximization is not
truth-seeking. Just as Persian bribes manipulated ancient morale,
modern "whales" can distort market odds to manufacture narratives
or hedge external interests. In both cases, the prediction is a
commodity sold to the highest bidder rather than an objective
forecast of reality.
testaccount28 wrote 10 hours 59 min ago:
and newspapers are owned by fatcats. but we are still interested
in what they have to say.
rfv6723 wrote 10 hours 52 min ago:
This comparison is flawed because accountability creates a
structural divide. A newspaper has a visible masthead and named
editors, creating a reputational stake where consistent bias
leads to institutional ruin.
In contrast, Polymarket relies on pseudonymous liquidity. A
"whale" can use a "Persian bribe" to distort odds and then
vanish without consequence. While a newspaper offers a testable
argument, Polymarket provides a "math-washed" price signal that
allows financial manipulation to masquerade as objective
probability.
gmd63 wrote 17 hours 58 min ago:
They also allow people to convince those who trust that prediction
markets are accurate barometers of likeliness that certain events
will be likely with a meager amount of money.
DennisP wrote 17 hours 54 min ago:
The amount of money depends on how big the markets are.
skybrian wrote 1 day ago:
The prediction market itself is a ouija board. You're given a
number. You don't know who's moving the needle or why. You don't
know what you're paying for. Maybe you're paying for information
from people who are breaking someone's trust by giving it to you?
Or maybe you're paying them to make it happen?
Although, sometimes a market provides incentive to publish
information that's associated with the market being influenced. For
example, someone can do an investigation, short the stock, then
publish it.
testaccount28 wrote 20 hours 29 min ago:
but like, here in the real world, farmers use weather
derivatives. so the technology works, has a use case, is proven.
if your point is that one should not treat the market's number as
some oracular probability, then... of course i agree! there is no
such thing. the market provides a signal, like any other.
skybrian wrote 20 hours 19 min ago:
Not a farmer, but I believe they use weather derivatives to
hedge and weather forecasts for predictions? Going through
markets for weather forecasts is adding a level of indirection
that generates a noisier signal.
The idea when hedging isn't to win on expected value. It's to
reduce risk. You're paying the market to provide insurance.
As a side effect, insurance does sometimes generate interesting
data. The insurance industry generates good data about life
expectancy. But it doesn't tell you when you're going to die.
DennisP wrote 17 hours 49 min ago:
Good points, but commodity futures and stock prices take into
account all sorts of information. They go haywire sometimes
but given how hard it is to beat the market, they seem to do
a pretty good job of aggregating it all.
skybrian wrote 17 hours 30 min ago:
As we learn from reading Matt Levine, they might also be
taking into account signals that are irrelevant to you for
technical reasons, or just nonsense. Often it works well
but sometimes you get meme stocks.
DennisP wrote 3 hours 46 min ago:
Which is why I said "they go haywire sometimes." But in
most cases, they work well enough that very few
professional investors are able to consistently beat the
judgement of the market.
chii wrote 1 day ago:
you dont need to pay to access the odds - it's public info.
There are people who pay to make bets on it (if they think the
odds are wrong). But you don't have to be a betting participant
to access the betting odds. You simply use the betting odds as a
prediction of a future outcome, and you take your action/planning
accordingly.
BoorishBears wrote 20 hours 13 min ago:
But usually when prediction markets have shown interesting
predictions, it's by odds taking large swings then collapsing
to the correct outcome relatively shortly before the event
right?
I assume because even if you know the future perfectly, putting
up large lump sums early could cap your upside if people take
your large sum as a signal (like OP is doing)
As a viewer you can take your own short-term "actions"
(gambles) outside the market using the brief advanced notice I
guess, but I'm not sure planning works like that.
In other words, what happens to the accuracy of prediction
markets if we're including the discrete odds that occured along
the way to the final odds? It's not better than random chance
or public sentiment for large events is it?
skybrian wrote 1 day ago:
Sure, but I meant it in the sense that someone needs to lose
money or there's no point in smarter or more well-informed
people playing. Their profits have to come from somewhere.
These could be (a) people who aren't as smart as they think
they are (b) people who subsidize the market in order to get
good predictions (c) people who are hedging (essentially,
buying insurance). Perhaps other possibilities.
chii wrote 1 day ago:
> the sense that someone needs to lose money
yep, and that's fine because they did so voluntarily.
If there were no stakes on the line, the information in the
odds will also not have any real meaning.
skybrian wrote 23 hours 38 min ago:
Itâs good that itâs voluntary, but thatâs not really
what Iâm getting at. People voluntarily spend money in
Vegas and buy meme coins too.
This doesnât tell us all that much about whether a price
signal is a valuable source of information. Often, people
have varied interpretations of what a price movement means.
The price doesnât tell you how to interpret it. The
obvious interpretation can be wrong.
tester756 wrote 1 day ago:
That sounds cool and fancy in theory, but how do you find that
information among the noise?
like if 50 ppl vote A, 45 people vote B and 1 person who actually
knows their shit votes B?
How do you find it? By amount?
FergusArgyll wrote 19 hours 20 min ago:
It's not voting, it's a market
testaccount28 wrote 20 hours 33 min ago:
what do you think you're asking?
like any signal, you reflect on it, integrate it into your
belief, think through the consequences, etc.
we all want mr. delphi to tell us exactly what will happen. but
without such a friend, we reason under uncertainty. markets are
one tool we've found to coordinate such signals.
would you ask the same of hiring a private investigator, or
paying for the new york times? there is no authority with your
interests but yourself; you must choose who to trust.
jstanley wrote 1 day ago:
Because the people who are consistently right will consistently
win money and will make bigger bets which move the price more, in
the limit case making the price converge on the true probability
of the outcome.
This is the theoretical underpinning of prediction markets.
lukev wrote 1 day ago:
Equating being "consistently right" with having a sufficiently
large stash of capital is ludicrous.
"right" people will wisely take most their winnings out of a
high-variance market. "wrong" people with deep pockets (or lots
of wrong people with shallow pockets) will continue to distort
the market.
chii wrote 1 day ago:
> will continue to distort the market.
they can only do so as long as they have enough capital to
lose. Because every time they try to move the betting markets
against the truth, they will simply lose that money when the
event happens (and turns out they were wrong).
So any distortion will merely be temporary. Unless they have
access to unlimited capital of course - which is not true yet
for anyone (but the US gov't).
lukev wrote 23 hours 34 min ago:
That only makes sense in a hermetically sealed system,
which this is very much not.
krapht wrote 20 hours 48 min ago:
Yes, but is this a problem? Haven't most betting markets
turned out to offer accurate predictions?
lukev wrote 15 hours 21 min ago:
Not particularly so. But even if it were, would that
justify the social cost of this kind of gambling?
SauntSolaire wrote 1 day ago:
Well, the more often you're right, the more capital you will
be able to accrue to bet with next time.
0x3f wrote 1 day ago:
Apart from minor effects, the price is the probability. If you
'know your shit', you have more confidence and thus bid up or
down until there are no more counterparties willing to accept
your price, and thus the price settles at approximately the
expert/insider probability.
coldtea wrote 1 day ago:
Information about the future without power to do anything about it
(except bet on it), like is the case for most information and most
people, is useless.
testaccount28 wrote 20 hours 37 min ago:
surely this criticism applies as well to... any information.
tombert wrote 1 day ago:
It baffles me that Polymarket is legal.
Even if there wasn't any kind of insider betting going on, it just
seems so disgusting to turn literally everything into a casino.
There's a bet going on right now about Jesus coming back before 2027
[1], and a part of me wants to do it because I'm pretty confident Jesus
isn't coming back by the end of the year (or any year), but it seems
kind of wrong to try and extract money out of people who are gambling
away their money.
HTML [1]: https://polymarket.com/event/will-jesus-christ-return-before-2...
bryant wrote 1 day ago:
The returns on [1] seem to be worse than CDs, and with no government
insurance, so it's not worth it at the current payout. But if a
religious event spikes the odds, it'll be worth taking the other side
of this bet.
tombert wrote 1 day ago:
Yeah, maybe I could fabricate a Nostradamus quote that implies that
removing tariffs will spark an apocalypse or something.
0x3f wrote 1 day ago:
Polymarket's legality has not yet been tested in many places,
although I don't personally object to it being legal, there's a
chance it might not be.
Also, I'd advise against betting on the Jesus market. You can't
actually read the price as a probability here due to time value of
money, opportunity cost, etc. So you'd lose money (or at best, gain
nothing) by betting against it. It's priced correctly.
tombert wrote 1 day ago:
> Also, I'd advise against betting on the Jesus market. You can't
actually read the price as a probability here due to time value of
money, opportunity cost, etc. So you'd lose money (or at best, gain
nothing) by betting against it. It's priced correctly.
Yeah, and assuming Jesus doesn't come back that's only about a 3.6%
return rate, which is what Treasury Bills are getting right now
[1]. At that point I might as well do that and avoid paying state
tax on my interest.
HTML [1]: https://home.treasury.gov/resource-center/data-chart-cente...
0x3f wrote 1 day ago:
Exactly, the existence of alternatives is mostly what keeps the
price non-zero. I think counterparties who are actually betting
on Jesus returning will be quite rare. So I wouldn't feel bad
about taking money from saps, more about just getting a bad rate
of return for yourself.
tombert wrote 1 day ago:
Yeah, maybe a bad example on my end.
Still, I just find the idea of turning everything in politics
into a casino kind of gross. Taken to the extreme it can get
pretty disgusting.
Like, imagine that there were a Polymarket of "Will COVID
deaths break 1 million?" or "Will Take His Fifth Victim?".
These are hyperbolic examples and I'm not saying that anything
on Polymarket is that bad, but even the stuff that's currently
on there right now like "Khamenei out as Supreme Leader of Iran
by March 31?" [1] or "Israel strikes Iran by February 28,
2026?" [2] seems kind of crass. These are real issues that
have real consequences that affect many real humans (who are no
less valuable than me) and people are treating this shit like a
fucking game.
I'm not accusing you of that, to be clear, it's just why I find
Polymarket to be gross and I'm not sure it should be legal. [1]
HTML [1]: https://polymarket.com/event/khamenei-out-as-supreme-l...
HTML [2]: https://polymarket.com/event/israel-strikes-iran-by-fe...
0x3f wrote 1 day ago:
The market already bets on war and death, and has done for
probably centuries, only it's mostly institutional players.
Seems to me Polymarket just democratizes that, both for
bettors and potentially consumers of the probabilities.
I would say the average person is terrible at aggregating
media and making predictions, at least this way they can
access expert opinion for free.
Of course as yet it's still niche nerd stuff but if I were in
Iran, I'd probably find a signal about imminent strikes or
future regime change quite useful.
names_are_hard wrote 1 day ago:
I'm in Israel. If you turn on the TV lately, you will
inevitably hear a bunch of talking heads endlessly
analyzing every word Trump said, and the movement of
various US military apparatus, and then sharing "expert"
insights into when there's going to be an escalation.
I can't do anything about this, except decide when it's
time to pack my go-bag and leave it near the door so I'm
ready to go to the bomb shelter in middle of the night. To
that end, polymarket odds are helpful. I'd never bet any
money myself, of course.
In related news, I read recently that the IDF is currently
investigating some personnel who evidently made money
predicting the last Israel-Iran flare up using inside
information. Naturally this is quite unlawful.
tombert wrote 1 day ago:
I don't like it when governments and military contractors
and billionaires gamble with human lives either.
Even if you can derive some utility out of the metrics
doesn't mean it's good. One can find silver linings in
many illegal things but that doesn't imply that it should
be legal.
0x3f wrote 1 day ago:
It's not only those groups though, for example a stable
food supply requires an efficient commodities market.
The utility is not just marginal.
w10-1 wrote 1 day ago:
Speculation and concern from a naive observer:
Is it polymarket presenting this ability to detect insiders? Or is
someone trying to sell the service of detecting insiders to those
wanting to know if bets are on equal footing? (or wanting to follow
insiders? or wanting to hide your identity by making multiple accounts?
Are there per-account fees, when polymarket might encourage people to
make multiple accounts?)
Regardless, polymarket seems to be on balance corrupting, by monetizing
and normalizing use of inside information, which violates agency
principles. It's not clear that it really offers hedging or predictive
benefits.
When trading firms do better (after data discovery and analysis),
there's some evidence they're better than other firms, and you can
trust them with some money. But when there's a public prediction
market, the only benefit is to the insiders.
fsckboy wrote 3 hours 3 min ago:
>But when there's a public prediction market, the only benefit is to
the insiders.
false.
all the conclusions economists draw in microeconomic theory about
efficient markets are based on pricing that reflects symmetric
information. secrets are asymmetric. trading on inside information
drives the market price in the direction it should be moving, making
the market more efficient, a benefit to all participants in the
market.
this is not a defense of trading on inside information, simply
pointing out the mechanics.
Lu2025 wrote 12 hours 4 min ago:
Yep it's rotten.
I think the intuitive revulsion many feel toward the Polymarket is
simply due to the unfairness of it.
cowthulhu wrote 11 hours 16 min ago:
Prediction markets should be accurate, not fair. If people want to
gamble without doing the work of finding some alpha, they should
head to a casino, not a prediction market.
alphazard wrote 18 hours 15 min ago:
> Regardless, polymarket seems to be on balance corrupting, by
monetizing and normalizing use of inside information,
This is a common take on "inside information", but for most people
this opinion is totally unaligned with their own goals.
The people who benefit from "no insider trading" in any market, are a
small group of active traders, some institutional, some not.
For literally everyone else, insider trading is a net win. Insider
trading improves price discovery. If you passively invest then you
benefit from the price being more accurate when whatever fraction of
your paycheck goes into the market.
I don't know your own situation, maybe you are one of those few
traders who needs information to spread a certain way in order to
make money. For everyone else, don't be fooled into promoting an
idea against your own interests.
airstrike wrote 14 hours 22 min ago:
I'm honestly puzzled by this take.
Clearly the people who benefit from insider trading in any market
are those doing the insider trading, not all market participants.
The argument is not that Polymarket et al are "insider trading
only" but rather that insider trading in those markets is not
regulated so people can get ahead of trades based on confidential
information and make a lot of money off of all the suckers gambling
their money away on ridiculously frivolous bets.
If you don't see the problem with that, you're complicit,
misinformed or brainwashed.
A similar issue is that of market manipulation, since many markets
in these platforms can be directly manipulated by participants in
manners as easily as spamming some words on an earnings call.
alphazard wrote 13 hours 43 min ago:
> If you don't see the problem with that, you're complicit,
misinformed or brainwashed.
The problem that I imagine you see with this, is that it doesn't
conform to a particular, special, notion of fairness that you
think the market should have.
Informed parties have an edge over uninformed parties. This edge
is "unfair" if you believe the market should be a lottery. The
market is designed to pay people with accurate beliefs, by taking
from people with inaccurate beliefs. Everyone's belief is valued
based on its accuracy, and the market is fair in that sense.
Fairness is actually irrelevant to the societal good the market
provides, which is to produce accurate prices. A third party,
who doesn't participate, shouldn't care about the market being
"fair", they should care about it giving good information.
> A similar issue is that of market manipulation, since many
markets in these platforms can be directly manipulated by
participants in manners as easily as spamming some words on an
earnings call.
If you are betting on what a person will say, and the person
knows about the market, that is a chaotic system. If you bid the
price away from max entropy then you deserve the outcome.
airstrike wrote 3 hours 7 min ago:
This has nothing to do with fairness
DennisP wrote 17 hours 55 min ago:
In fact, a lot of people claim that the main point of prediction
markets is to give the general public better predictions, and
insider participation actually helps with that.
raincole wrote 1 day ago:
I think you might misunderstand the value preposition. Polymarket
wants insider trading. That's the whole point. They'll eventually
cave in to PR pressure and deviate from the original purpose, though.
ses1984 wrote 13 hours 42 min ago:
Some of the things people bet on can be decided by a single person.
The more accurate the markets get, the greater the incentive for
insiders to spoil it.
That doesnât benefit anyone but the insider and probably has a
net negative on everyone else.
peterjliu wrote 1 day ago:
Post author here: To clarify, this is not a post from Polymarket.
This is talking about using Compound AI (product I'm working on) to
query Polymarket data, including finding insiders, just as a fun
example analysis you could do.
Often you need a well-calibrated probability of a future event to
feed into some other analysis, and Polymarket is pretty great for
that. An example is how much insurance (hedge) to buy for some
disastrous event.
jwpapi wrote 1 day ago:
Why dont you just copy the trades?
0x3f wrote 1 day ago:
If I'm an insider with 100% confidence, I'll take all offers at a
certain price as long as I can afford it. Similar story for
lower levels of confidence (but still inside info). There won't
necessarily be any left for you to copy at a viable price.
jwpapi wrote 1 day ago:
The examples didnât look like theyâve completely emptied
the orderbook
0x3f wrote 1 day ago:
Because there's always some uncertainty and capital limits.
But the uncertainty about the outcome is itself inside info,
and that's compounded with your own uncertainty about the
insider as a copy trader. So the insider will empty out
certain price levels only, and your certainty is strictly
less than theirs, meaning you have even fewer viable levels
to buy.
chii wrote 1 day ago:
> Similar story for lower levels of confidence
therefore, the polymarket betting odds will reflect the truth -
even if that info is a secret that nobody else but the insider
knows. And if this is the case, then even an outsider could
make use of the odds as a source of info which would ensure
that market efficiency (which is about the flow of information)
is high.
So what's wrong with insider trading again?
a2128 wrote 5 hours 18 min ago:
If you believe Polymarket as a serious source of truth,
consider that somebody manipulated "Will Jesus Christ return
before 2027?" because there was a secondary market on whether
that market will rise above 5%. Which defeats the whole idea
that the betting odds will reflect the truth. Also even
pre-manipulation I don't think a 2% chance that Jesus will
return was reflective of truth.
HTML [1]: https://gizmodo.com/checking-in-on-polymarket-bets-o...
hibikir wrote 15 hours 25 min ago:
The issue comes from situations where the insiders can alter
the answer to help their own bets. The simple example is the
bet on how long a press conference will be: It's a ridiculous
bet when the person giving said press conference can bet and
fleece the market.
Will X country invade another before or after day X? A large
enough market changes the answer, as the agent can change the
decision. And we can see this kind of thing in many
interesting questions.
yowayb wrote 15 hours 29 min ago:
How is this distinguishable from pump-dump?
mminer237 wrote 18 hours 14 min ago:
It rewards blatant corruption? What's the benefit is the
bigger question.
0x3f wrote 16 hours 46 min ago:
The benefit is that inside information becomes public
information. The reward for the insider is just the
necessary incentive for that to happen.
a2128 wrote 5 hours 9 min ago:
Has there ever been any documented circumstance where
significant inside information became public and known
thanks to a trade? Most often, the trade is made at the
last minute, and the information gets subsequently
revealed anyway. And it's impossible to tell whether
somebody is an inside trader, a wealthy gambling addict
making a stupid decision, or hypothetically a foreign
agent pretending to be an inside trader to make people
believe in a particular outcome.
wqaatwt wrote 1 day ago:
That someone with inside information will e.g. make 500%
while those late to the party e.g. only get 10%? (of course
your example is not very realistic to begin with)
nubg wrote 19 hours 50 min ago:
So is any kind of business illegal? Making investments?
genidoi wrote 1 day ago:
Past performance is not an indicator of future performance.
kylecazar wrote 1 day ago:
Shouldn't it be if you suspect they are executed by an insider?
genidoi wrote 1 day ago:
You can't be sure that they are an insider or lucky, just
from onchain data.
bergen wrote 1 day ago:
If they make single market predictions with high accuracy
it is very very likely they are
genidoi wrote 1 day ago:
No vigilant insider is making a series of "single market
predictions with high accuracy" on the same account. They
would make unlinkable bets on fresh accounts.
meetingthrower wrote 20 hours 43 min ago:
Also insider trading is A-OK on prediction markets!
BoxFour wrote 1 day ago:
> No vigilant insider is making a series of "single
market predictions with high accuracy" on the same
account.
There seem to be quite a few non-vigilant insiders.
That's the very premise of the post we're discussing.
This is unsurprising to anyone who's seen the various
ways people get busted for insider trading in equities.
_alternator_ wrote 1 day ago:
This is largely the classical objection to prediction markets. But
prediction markets do have value to outside of the markets because
people want to know the future.
conformist wrote 1 day ago:
> âHedge funds invest a ton in "alternative data", like credit card
transaction data or satellite-imagery (are Walmart's parking lots
full?) and need to process as much relevant information as possible to
make predictions that are relevant to investments. â
Ah yes the famous credit card data and Walmart parking lots example
that hedge funds were giving a few years ago in every interview and
news article. Safe to assume that specifically these data sets are not
what you should look at to make money.
currymj wrote 1 day ago:
there is some inevitable "insider trading" in commodities markets. for
example if you're a giant agricultural company, and you want to hedge
the price of soybeans, you have some extremely relevant insider
information about the soybean market. but you're still allowed to trade
soybean futures. very different than securities.
if prediction market contracts really are regulated as commodities,
then presumably a lot of insider trading must be legal, although there
must be limits of one kind or another and probably if you do something
really egregious you might be prosecuted under some legal theory.
joncooper wrote 1 day ago:
An agricultural company hedging the price of soybeans is precisely
hedging, not speculation. The insider information they have is their
supply/demand/pricing picture. That's different than the colloquial
definition of insider information which I've always taken to tie to
event occurrence (or not).
hansvm wrote 1 day ago:
Why not both? They also have insider information and aren't
required to limit their trades to those which would hedge the
crops.
aleksiy123 wrote 1 day ago:
Out of curiosity, is it possible to see everyone's bets and positions
in real time?
Or is the info only available later?
I'm guessing that bots predicting insiders and copying positions is
already a thing.
SamPatt wrote 1 day ago:
You can see when they buy or sell a position. It's on the blockchain
so it's all public. And yes, copying positions is called copy-trading
and it's extremely popular.
Orders aren't public though. Only the actual trades. This is
important because by the time the trade is known by others very often
the edge is gone. Especially if you have other people watching the
same trader and they all try to copy the trade at the same time.
nubg wrote 19 hours 44 min ago:
Could the "trend-setter" not just buy, sell, buy, sell and own
everybody who moves after him?
swingboy wrote 1 day ago:
If it takes so long for the actual trades to show up then why is
copy-trading popular?
0x3f wrote 1 day ago:
Not all strategies are low-latency, so you can copy trade someone
with a buy and hold approach. For example someone you think is
an insider or whale who might influence the outcome.
syntaxing wrote 1 day ago:
Isnât this the motivation behind polymarket? To incentivize those
that have information to bet as a signal of âtruthâ. What I donât
get is why would anyone bet on this stuff that donât have insider
information besides those with gambling addiction.
throwaway-99482 wrote 1 day ago:
It is for people like me. I'm usually right about things before other
people even know about them. Bought BTC in 2011, ETH in 2014 (funded
the IPO), Tesla in 2013, Microsoft right when they replaced Ballmer
(at $30 I think), Nvidia on the Covid crash day in 2020, learned Rust
in 2017, took AI seriously two weeks after ChatGPT 3.5 launched. I
never had any insider information. I typically have a good feeling
for things.
hattmall wrote 12 hours 0 min ago:
Great! So how do I follow your moves? Ideally the prediction market
would have a way where traders like this filter to the top, but
then making that information known would impact the market
itself.!.!.
fatherwavelet wrote 19 hours 38 min ago:
You are just such a genius. We all stand in awe. Thank you for
letting me be in the presence of such towering intellect.
Some might even say Dirac like but I so NO, this simply does not go
far enough.
I will remember this moment for the remainder of my life. Thank
you.
nubg wrote 19 hours 47 min ago:
He even created this channel 5 years ago just for this post. Teach,
me bro.
wqaatwt wrote 1 day ago:
> learned Rust in 2017
Seems more like a hobby activity than a decision that would lead to
any practically meaningful outcome. Since as you said, you were
already a billionaire in 2017 any money you could make by writing
software yourself seems insignificant
ggggffggggg wrote 1 day ago:
But âmaking lots of betsâ is a measure of your appetite for
risk, not your acumen. So unless you are filthy rich (in which
case, kudos!) I think you are more proving parentâs point.
conformist wrote 1 day ago:
Thereâs also a vague argument around hedging some actual risks that
some market participants genuinely want to hedge⦠which depends a
lot on the specific bet. Eg hedging exposure to specific political
events, wars or even company announcements can be relevant and worth
a premium for non-insiders. Where thereâs a premium to be collected
there are speculators to do so.
peterjliu wrote 1 day ago:
Some people have better data, like insiders.
Some have better models that predict with higher accuracy, given the
same data.
kylestanfield wrote 1 day ago:
Itâs a gambling site. The motivation behind it is to make money
through transaction fees. You can bet on sports games too.
JasonADrury wrote 17 hours 58 min ago:
Since when does polymarket charge transaction fees?
doomslayer999 wrote 1 day ago:
Because taking high variance slightly negative EV shots is not a
terrible strategy when you have a long time horizon.
c22 wrote 1 day ago:
I feel like the longer your time horizon the worse -ev games are
for you?
I bought one lottery ticket, I don't think my odds are gonna get
any better than that.
doomslayer999 wrote 20 hours 32 min ago:
To be clear, I meant the opposite. I meant that if you take a
high variance swing and you lose, you have capped downside, so
you can rebuild and recover hard long term. Conversely if you win
you have a huge head start and can deploy the capital quickly.
Of course you DONT want to repeatedly take -EV bets. That would
reduce variance and converge you to the mean which is negative by
the central limit theorem.
tyre wrote 1 day ago:
this is the "lose money on every sale but make it up on scale"
version for gamblers and I love that for you.
doomslayer999 wrote 20 hours 31 min ago:
Definitely not. Itâs more like either winning a 1B B2B contract
or going bankrupt. Like I said above you donât want to scale up
taking high variance shots because it will reduce variance and
converge towards the mean
conformist wrote 1 day ago:
By ânot terribleâ you mean âbad but not very badâ and not
âgoodâ right?
kibwen wrote 1 day ago:
"High variance, slightly-negative EV shots on a long time
horizon" is a gambling addict's way of justifying the old adage,
"sure, we're losing money on each sale, but we'll make up for it
in volume!"
hattmall wrote 14 hours 51 min ago:
Disagree, it's way more like overall our sales are losing
money, but the long term plan is to get a buy out.
A strategy that works for a non-trivial amount of startups.
The idea is that if you play incorrectly long enough eventually
a bigger better that's more wrong then you will come along.
carefree-bob wrote 1 day ago:
It's not just a gambling addiction, but many people consider
themselves smarter than the average person, and nature's way of
punishing these people is creating things like stock markets and
polymarkets.
bstsb wrote 1 day ago:
iirc polymarket doesn't explicitly rule against this, and neither does
the law. prediction trading like this operates as "commodities"
trading, so they have no obligation to prevent this, and indeed they
have an financial incentive to let it continue (assuming others don't
leave the platform!)
BoxFour wrote 1 day ago:
> neither does the law
I donât think thatâs right. Prediction markets fall under CFTC
oversight, and the CFTC absolutely has insider trading rules. We just
havenât seen any enforcement yet. Partly because the space is still
new, and partly because enforcement priorities have been uneven
lately (to put it mildly).
The CFTC has already signaled itâs starting to look more closely at
insider trading in prediction markets. It's almost certainly just a
matter of time. It's pretty likely a future administration will clamp
down on this, if the current one doesn't.
aleksiy123 wrote 1 day ago:
I would go even further and say that it's a vital part of prediction
markets as the intended theoretical goal is accuracy of predictions.
delichon wrote 1 day ago:
> Clearly, these insiders have figured out a way to cash in on
information. Whether that's kosher is out-of-scope here
To the extent that the value of prediction markets is in their power to
predict, insider trading is kosher. Wholesome even.
empath75 wrote 1 day ago:
It's not that it's cheating _in the market_, but if people have an
obligation to their employers, etc, to keep information confidential,
then they are stealing from their employer by cashing in on it, as
sure as if they had taken money from the till.
PollardsRho wrote 1 day ago:
What about bets without insider participation, where you want the
market to function as an aggregator of educated guesses? OP has one
reaction to insider trading, but I imagine a very common alternative
would be "those insiders make their money off of bettors like me, I
shouldn't participate." Some questions are clearly insider-proof, but
I imagine many questions have insiders who don't bet on Polymarket.
If Polymarket is going to be a good prediction market, surely it
should incentivize people to make predictions on those questions too?
tedsanders wrote 1 day ago:
Bribing employees to disclose confidential information entrusted to
them is not kosher nor wholesome. I consider corporate insider
trading on these markets to be analogous - if you're an employee and
you trade, you are selling your employer's info for money. Nearly
every employer would fire employees caught giving away confidential
information for personal bribes.
In the stock market, Matt Levine likes to say that insider training
is about theft, not fairness. You can be prosecuted for merely
sharing info with a friend on a golf course who then proceeds to
trade. Your crime is not trading (you didn't even trade), but
misappropriating information you were entrusted with and not
authorized to sell.
pousada wrote 1 day ago:
The market economy is not about fairness but about ruthless power.
The worlds most influential people demonstrate that only power
matters; that the world order we built last century through
unimaginable suffering and violence matters less than securing
their own personal gain; that law, morals, and order were just
dreams of the weak
moduspol wrote 1 day ago:
Indeed. For those of us not gambling, it's really quite beneficial.
kibwen wrote 1 day ago:
Prediction markets can only pay out based on public information,
which means that prediction markets can only "reveal information"
like this for things that would have been public knowledge anyway.
And insiders are always risking that leaking their insider info
might influence the outcome of the bet against them (like if
leaking the date of a covert military operation causes the
operation to be rescheduled), so they're financially incentivized
to wait as long as possible before tacitly revealing that
information. So prediction markets are the worst possible way of
revealing hidden information: you will only learn about things you
would have already known, and only when it's too late to make any
use of that knowledge.
smcin wrote 1 day ago:
You're overlooking that sudden, unexplained or counterintuitive
movements in the actual prediction market itself, well before the
event occurs/market resolves can themselves convey information,
about what apparent insiders think (or whales want to manipulate
the market to think).
Obvious example: Polymarket now has 69(!) markets involving Iran:
[1] Consider the timing of those markets wrt 2026 national
elections in US, Israel, also Sweden, legislative elections in
France, Germany (as canaries for their next general elections)
plus a possible change in UK PM, plus any possible Ukraine or
Venezuela outcomes. And of course events in the stock market or
energy markets make certain outcomes more/less likely.
Also, on Polymarket traders often buy and sell before a market
resolves, to exploit patterns in other traders.
And consider what happens at major media e.g. CNN now they've
partnered with Kalshi, wrt whether the broadcasting certain
predictions/viewpoints/interviewees get boosted/suppressed.
HTML [1]: https://polymarket.com/predictions/iran
freejazz wrote 15 hours 16 min ago:
>Obvious example: Polymarket now has 69(!) markets involving
Iran: [1] You have not conveyed what information is thought by
insiders in your example
HTML [1]: https://polymarket.com/predictions/iran
kibwen wrote 1 day ago:
> movements in the actual prediction market itself, well before
the event occurs/market resolves can themselves convey
information, about what apparent insiders think (or whales want
to manipulate the market to think)
Yes, and surely you see that the inability to distinguish
between true signal and deliberate countersignal until after
the bet has resolved is an indictment of the very model of
predictions markets. Like a qubit, you must collapse the
waveform to extract the information.
smcin wrote 1 day ago:
If you can see which account placed key trades, you can
determine if it's likely to be signal/countersignal/neither.
Certainly the platform itself can.
moduspol wrote 1 day ago:
There's also a financial incentive to get your bets in early,
while the odds are still in your favor. The longer you wait, the
higher the risk that your secret becomes public knowledge.
I agree it's not perfect, but I think you're underplaying a lot
of the value.
ralph84 wrote 1 day ago:
Not sure why the dumb money keeps playing. If you're not the insider
the person you're trading against is.
pocksuppet wrote 1 day ago:
Because you think you can predict the probability of the insider
insidering each way and place a bet before they insider
doomslayer999 wrote 1 day ago:
Because its an event contract with a defined upside/downside and time
horizon. You know exactly what you stand to lose and gain and when.
Makes it a valuable part of some intricate financial strategies.
tokenless wrote 21 hours 6 min ago:
Plus casinos exist. Why do people play blackjack.
taylorius wrote 1 day ago:
"the dumb money"
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