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Uncovering insiders and alpha on Polymarket with AI

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Re: Uncovering insiders and alpha on Polymarket with AI

#151

Post by airstrike »

alphazard wrote: post #133
airstrike wrote: post #132

Earlier quoted context omitted.

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 ga…

> 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…

This has nothing to do with fairness of outcomes but with defrauding naive investors of their money.

For context, I'm a former Investment Banker so this isn't coming from a place of naivete but an informed view. I did have to study SEC regulations for those FINRA examinations....

Re: Uncovering insiders and alpha on Polymarket with AI

#152

Post by fsckboy »

w10-1 wrote: post #26

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?) Regar…

>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.

Re: Uncovering insiders and alpha on Polymarket with AI

#153

Post by ttul »

nubg wrote: post #146
ttul wrote: post #144

Earlier quoted context omitted.

(I am not a bot, but I definitely use LLMs to help me conduct research and write well-informed comments here)

> and write welp guilty as charged!

LoL. Some day soon, we will all need to carry proof of humanness and have our English Literature transcripts from university to evidence that we did, actually, learn to write at some point.

Re: Uncovering insiders and alpha on Polymarket with AI

#154

Post by 0x3f »

a2128 wrote: post #148
0x3f wrote: post #124

Earlier quoted context omitted.

The benefit is that inside information becomes public information. The reward for the insider is just the necessary incentive for that to happen.

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 t…

It's impossible to know anything for certain; almost everything is probabilistic.

Also I'm not sure how to interpret your criteria because timing matters, I don't think saying 'it gets revealed in the end' is very meaningful.

Anyway, on Polymarket specifically, sure, military strikes are a common one. Seems like a useful signal to go hide in the basement. Outside Polymarket, there were insider trades in 2008 that I'm sure were useful.

Re: Uncovering insiders and alpha on Polymarket with AI

#155

Post by 0x3f »

hibikir wrote: post #127
chii wrote: post #69

Earlier quoted context omitted.

> 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?

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 kin…

These are not secret divinations though, the participants know this and price it in or otherwise allow it to determine which markets they participate in.

Re: Uncovering insiders and alpha on Polymarket with AI

#157

Post by airstrike »

fsckboy wrote: post #152
w10-1 wrote: post #26

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?) Regar…

> 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…

We're not solving for efficient pricing at the expense of one insider reaping all the benefits because they already either knew or set the price before hand.

Re: Uncovering insiders and alpha on Polymarket with AI

#158

Post by myroon5 »

JasonADrury wrote: post #116
kylestanfield wrote: post #14

Earlier quoted context omitted.

It’s a gambling site. The motivation behind it is to make money through transaction fees. You can bet on sports games too.

Since when does polymarket charge transaction fees?

Polymarket US has fees:

https://www.polymarketexchange.com/fees-hours.html

Re: Uncovering insiders and alpha on Polymarket with AI

#159

Post by slashdev »

0x3f wrote: post #50
jwpapi wrote: post #37

Earlier quoted context omitted.

Why dont you just copy the trades?

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.

You might not have enough money to drain the order book.

And there's always a chance things go wrong, even with inside information. It would be unwise to go all in.

Re: Uncovering insiders and alpha on Polymarket with AI

#160

Post by DennisP »

JKCalhoun wrote: post #150
DennisP wrote: post #114

Earlier quoted context omitted.

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.

Thanks. Proof of work, now proof of stake—I clearly don't keep up with crypto mining.

Yeah most of the attention is still on Bitcoin and that'll be proof of work forever.
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