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Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

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Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#171

Post by tmansour »

nl wrote: post #107
pizzalife wrote: post #99

Earlier quoted context omitted.

You're not a financial company. Grain futures have an actual use. Come on now. You're insulting the reader base here.

There are a vast number of use cases here. A simple one is the peak mortgage rate market[1]. That allows you to create hedges against movement on variable rate homeloans directly. There's a number of unemployment-related markets that allow you to create insurance for yourself against unemployment. And these are just things I've thought up of in a couple of minutes, not even considering what actual financial markets m…

+1 on this answer - there's a ton more examples here: student loans, climate policy, hurricanes, inflation, etc.

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#172

Post by tmansour »

renewiltord wrote: post #120
nl wrote: post #107

Earlier quoted context omitted.

There are a vast number of use cases here. A simple one is the peak mortgage rate market[1]. That allows you to create hedges against movement on variable rate homeloans directly. There's a number of unemployment-related markets that allow you to create insurance for yourself against unemployment. And these are just things I've thought up of in a couple of minutes, not even considering what actual financial markets m…

That's neat but how does one hedge a $800k loan with a max position of $25k? Idea seems spurious. The difference is substantially higher. Compare a pre-hike 2.8% with a present 6.8%. Your $25k hedge is going to be pointless.

It's 25k downside exposure limit (doesn't mean your upside is capped at 25k).

Also even if you can't hedge the exposure in its totality, it is still worth hedging a fraction of it. "Under-hedging" is a common term in commodities markets - people often want to cover a portion of their exposure and leave the rest in the hands of mother nature.

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#173

Post by renewiltord »

tmansour wrote: post #172
renewiltord wrote: post #120

Earlier quoted context omitted.

That's neat but how does one hedge a $800k loan with a max position of $25k? Idea seems spurious. The difference is substantially higher. Compare a pre-hike 2.8% with a present 6.8%. Your $25k hedge is going to be pointless.

It's 25k downside exposure limit (doesn't mean your upside is capped at 25k). Also even if you can't hedge the exposure in its totality, it is still worth hedging a fraction of it. "Under-hedging" is a common term in commodities markets - people often want to cover a portion of their exposure and leave the rest in the hands of mother nature.

Useful to know.

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#174

Post by MuffinFlavored »

froogle wrote: post #138

Prediction markets are a fantastic concept with a ton of value I think for everyone. So I wish companies in the field success and I hope they thrive despite regulators doing their best to destroy them, like PredictIt. I think it's a shame Kalshi has managed to get their hooks into the CFTC and, rather than lobby to open the field to all prediction markets, instead lobbied for narrow permissions to operate only their…

what value do they provide other than speculation/gambling/betting?

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#177

Post by [deleted] »

nl wrote: post #107
pizzalife wrote: post #99

Earlier quoted context omitted.

You're not a financial company. Grain futures have an actual use. Come on now. You're insulting the reader base here.

There are a vast number of use cases here. A simple one is the peak mortgage rate market[1]. That allows you to create hedges against movement on variable rate homeloans directly. There's a number of unemployment-related markets that allow you to create insurance for yourself against unemployment. And these are just things I've thought up of in a couple of minutes, not even considering what actual financial markets m…

[deleted]

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#178

Post by sidcool »

thecoppinger wrote: post #155
sidcool wrote: post #143

I am naive here. But is it a platform for gambling like features for markets?

Here's a good primer on why prediction markets are actually a massive opportunity to improve society and democracy : https://www.youtube.com/watch?v=BLS2TX1KxzI I know that sounds hyperbolic, but once you go down the rabbit hole it will start to make sense

Thanks

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#179

Post by brap »

JonathanBeuys wrote: post #4

Wouldn't such an exchange be a good use case for a smart contract? It would make it very transparent, if the exchange is honest. As a history of all bids, payouts and judgments would be recorded on a blockchain. It probably also would do away with the KYC, so everybody could participate. And nobody would have to give away their private data. Thinking about it ... if the smart contract would let users post new bets as…

This is a nice idea in theory, but in practice you have to really trust the judges. Suppose that 99.9% of people thought that X is going to happen, but it didn't. If the judges are a representative sample, then 99.9% of them were wrong and are about to lose money. Unless they cheat.

Re: Launch HN: Kalshi (YC W19) – A regulated exchange for trading on events

#180

Post by adamsmith143 »

tmansour wrote: post #166
adamsmith143 wrote: post #33

Why are we acting like this isn't just a prediction market? Also as others have said PredictIt did it first and was fine until you hired a former regulator and got them shut down. Questionable business practices. How long will you survive until the next upstart throws enough money at someone higher up the regulatory chain and you yourselves get shut down??

It's a prediction market in some ways... though prediction markets have been historically associated with unregulated venues etc. We're fully regulated by the federal government as a derivatives exchange, and that's a big difference in an of itself (it took us years to figure out the right model to offer derivatives dynamically, with events as underlying). Regulation allows us to plug into the financial ecosystem, an…

So it's a prediction market but you aren't legally allowed to be called a prediction market. In much the same way that Pyramid Schemes can operate as "Multi-Level Marketing", eventually the regulators will catch on and shut things down.
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