reply on: prediction markets aren't just gambling \ stacker news ~oracle

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67 sats \ 1 reply \ @south_korea_ln OP 15h \ parent \ on: prediction markets aren't just gambling oracle

I do like your traditional unravelling argument

It's a traditional unraveling argument.

It's only profitable for me to trade in this market if I have more knowledge (including the interpretability of the knowledge), than the average market participant. Knowing this, I drop out if I have zero private info. This elevates the average level of knowledge among the remaining participants, which elevates the knowledge requirement to be profitable. Thus, the traders who have more limited info drop out. The process continues until only the most knowledgeable trader stays in the market.

Does this rely on the efficient market hypothesis?

In an event, I agree that the revenue model is going to skew towards preying on gamblers.

I think Predyx is still fun because there are so few people joining, lots of inefficiencies to take advantage of. Also, the feeling of being able to steer the market one way or another.

For that reason, I don't feel like joining the much bigger Polymarket or Kalshi platforms, even if they had LN payments enabled.

100 sats \ 0 replies \ @SimpleStacker 13h

The unraveling argument doesn't rely on the efficient market hypothesis per se, but I think it rests on similar assumptions. Namely, that everyone is hyper rational and can strategize many moves ahead. In reality, people aren't that super rational, so the market won't unravel completely. But people are somewhat rational, so the dynamic will still be there.

I think it makes sense to not want to participate in the larger platforms. There, you are more likely to be betting against real insiders. (Not to mention, some oracle shenanigans in Polymarket). For a relatively small and unknown platform, you're more likely to be betting against people just having fun.