The pricing of the same event can differ across different platforms, and that is where the opportunity lies.
Written by: Pix
Translated by: Luffy, Foresight News
Most people gamble on prediction markets, while I arbitrage in prediction markets. Here are the specific strategies I used to earn $100,000 from decentralized, inefficient prediction markets.
Step 1: Understand the Rules of the Game
Prediction markets allow you to bet on the outcomes of real-world events, such as:
"Will Ethereum rise to $5000 by the end of the year?"
"Will MrBeast run for president?"
"Will Kanye West issue a token?"
Each market has a different user base, each with its own biases. This means that the pricing of the same event can differ across different platforms, and that is where the opportunity lies.
Case in point: If platform A quotes "yes" at $0.40 and platform B quotes "no" at $0.55, you can lock in a profit of $0.05 regardless of the outcome, which is arbitrage.
Step 2: Find Your Edge
The strategy that works best for me is multi-outcome markets, where pricing errors are most likely to occur.
Examples:
Who will win the F1 race this weekend?
Which party will win the UK election?
Who will be the next contestant eliminated from "Love Island"?
In theory, the sum of the probabilities of all outcomes should equal 100%, but in reality, it is common to see a total that reaches 110%.
Reason: Platforms often charge hidden fees ("excess premiums"), and odds are determined by users, leading to a lot of inefficient pricing.
Step 3: How to Determine if an Arbitrage Opportunity Exists
Core rules:
Find the same event on different platforms;
Choose the lowest price for each outcome;
If the total price is less than $1, arbitrage is possible.
Real case: Who will be the next pope?
The quotes from two platforms are as follows:
The strategy is to buy all outcomes, as one of them will definitely occur, ensuring a return of $1. Each trade yields a profit of $0.021 (2.1% risk-free return), which is arbitrage. You are not betting on who will become the pope, but rather on the fact that the two platforms cannot agree on who will become the pope. When they disagree, you can make money.
Myriad has much lower liquidity, but there are two other sites with closer price spreads. If you monitor more markets, you will find greater advantages.
I usually only engage in arbitrage when the APY is above 60% (APY = (profit margin / days to resolution) × 365).
In this case, the event ends in 29 days:
(0.021 / 29) × 365 ≈ 26.4% APY (below my threshold of 60%, I pass).
If the event ends in 7 days:
(0.021 / 7) × 365 ≈ 109.5% APY (I enter decisively).
Step 4: Race Against Time
Arbitrage in prediction markets is a game of delay:
After a price discrepancy occurs, there is usually only a few minutes' time window, not hours; rumors spreading, platform updates lagging, etc., can lead to price differences, and your advantage only exists during this time.
If possible, automate this part by using price alerts on Discord, Telegram, and Twitter. Sometimes I can spot price discrepancies just from muscle memory. The faster you act, the more you earn. Hesitate for 5 minutes, and the price difference disappears. My best spread achieved was 18%, which was quite substantial.
It is important to ensure that there are available funds on each platform and to be clear about the fees.
Step 5: Exit Early
Most people wait for the results to be announced, while I take profits before the outcome is clear.
Suppose I buy all outcomes at $0.94, giving me a $0.06 spread. I don’t need to wait for the results; if the market tightens, I can sell at $0.98 or $0.99, and I will exit.
This significantly boosts the APY, allowing for a quick switch to the next market.
Additional Tips
Look for overlapping events: For example, "Trump wins the 2024 election" and "Republicans win" may have hidden arbitrage;
Target smaller markets: More pricing errors, less competition;
Utilize niche platforms: Larger spreads, potential airdrop rewards;
Read settlement rules carefully: A single word can change the outcome;
Double-check: Confirm order books, transaction prices, and calculate including all fees.
Conclusion
I earned $100,000 in just over two months, with periods of calm and busy times. The greater the volatility, the more price differences there are, but even in a calm market, there is always the next inefficient market waiting to be discovered.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
