Recently conducting research and practical testing in the prediction market～

➤ Research results:

1/ End-of-day strategy: A small-scale test of the end-of-day strategy was conducted, and the results showed a negative EV (expected value), with an overall loss, not recommended as a primary direction.

2/ Short-term binary contracts: In-depth observation and data collection were also conducted for short-term binary contracts. No significant single-market arbitrage opportunities have been found so far. The market odds probabilities generally closely follow the fair probabilities derived from the Black-Scholes formula, with relatively efficient pricing and no arbitrage opportunities.

3/ Cross-market arbitrage: Currently, the only relatively stable opportunity lies in cross-market arbitrage. For example, buying Yes on one platform and buying No on another when the price difference is sufficient to cover transaction fees, which allows for locking in risk-free returns.

Polymarket can be prioritized as one leg, as its transaction fees are zero, significantly enhancing overall returns.

➤ Of course, the following key points must be noted:

1/ The percentage difference must be greater than the fees of the other platform;

2/ Prioritize events with shorter expiry times to improve capital turnover rate.

Note: The above is for information sharing only, not investment advice, please conduct your own research!

DeFi and prediction market enthusiasts: BitHappy