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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

#71

Post by chii »

lukev wrote: post #67
jstanley wrote: post #55

Earlier quoted context omitted.

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.

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.

> 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).

Re: Uncovering insiders and alpha on Polymarket with AI

#72

Post by skybrian »

chii wrote: post #70
skybrian wrote: post #65

Earlier quoted context omitted.

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 infl…

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.

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.

Re: Uncovering insiders and alpha on Polymarket with AI

#73

Post by raincole »

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…

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.

Re: Uncovering insiders and alpha on Polymarket with AI

#74

Post by names_are_hard »

0x3f wrote: post #60
tombert wrote: post #57

Earlier quoted context omitted.

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 currentl…

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 stu…

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.

Re: Uncovering insiders and alpha on Polymarket with AI

#75

Post by chii »

skybrian wrote: post #72
chii wrote: post #70

Earlier quoted context omitted.

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.

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.

> 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.

Re: Uncovering insiders and alpha on Polymarket with AI

#76

Post by jwpapi »

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.

The examples didn’t look like they’ve completely emptied the orderbook

Re: Uncovering insiders and alpha on Polymarket with AI

#77

Post by bergen »

genidoi wrote: post #51
kylecazar wrote: post #46

Earlier quoted context omitted.

Shouldn't it be if you suspect they are executed by an insider?

You can't be sure that they are an insider or lucky, just from onchain data.

If they make single market predictions with high accuracy it is very very likely they are

Re: Uncovering insiders and alpha on Polymarket with AI

#78

Post by wqaatwt »

chii wrote: post #69
0x3f wrote: post #50

Earlier quoted context omitted.

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.

> 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?

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)

Re: Uncovering insiders and alpha on Polymarket with AI

#79

Post by wqaatwt »

throwaway-99482 wrote: post #61
syntaxing wrote: post #8

Isn’t this the motivation behind polymarket? To incentivize those that have information to bet as a signal of “truth”. What I don’t get is why would anyone bet on this stuff that don’t have insider information besides those with gambling addiction.

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 thing…

> 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

Re: Uncovering insiders and alpha on Polymarket with AI

#80

Post by c22 »

doomslayer999 wrote: post #12
syntaxing wrote: post #8

Isn’t this the motivation behind polymarket? To incentivize those that have information to bet as a signal of “truth”. What I don’t get is why would anyone bet on this stuff that don’t have insider information besides those with gambling addiction.

Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.

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.

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