Recently conducted some research and practical testing in the prediction market

➤ Research results:

1/ End-of-day strategy: Small-scale testing of the end-of-day strategy showed a negative EV (expected value), resulting in overall losses. Not recommended as a primary approach.

2/ Short-term binary contracts: Also conducted in-depth observation and data collection on short-term binary contracts. Currently, no obvious arbitrage opportunities in individual markets have been identified. Market odds are generally closely aligned with the fair probabilities derived from the Black-Scholes formula, with relatively efficient pricing and no arbitrage opportunities.

3/ Cross-market arbitrage: The only relatively stable opportunity at the moment is cross-market arbitrage. For example, between different platforms, buying Yes on one side and No on the other. When the price difference is enough to cover transaction fees, a risk-free profit can be locked in.

Polymarket can be prioritized as one leg of the arbitrage because its trading fees are zero, which can significantly improve overall returns.

➤ Of course, the following points should be noted:

1/ The percentage difference must be greater than the fee on the other platform;

2/ Prefer events with shorter expiration times to improve capital turnover.

Tip: The above is for information sharing only, not investment advice. Please conduct your own research!

DeFi and prediction market enthusiasts: BitHappy