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Uncovering insiders and alpha on Polymarket with AI

159 points by somerandomness 8mo ago

ralph84 8mo ago
Not sure why the dumb money keeps playing. If you're not the insider the person you're trading against is.
- taylorius 8mo ago
  "the dumb money"
- pocksuppet 8mo ago
  Because you think you can predict the probability of the insider insidering each way and place a bet before they insider
- doomslayer999 8mo ago
  Because its an event contract with a defined upside/downside and time horizon. You know exactly what you stand to lose and gain and when. Makes it a valuable part of some intricate financial strategies.
  - tokenless 8mo ago
    Plus casinos exist. Why do people play blackjack.
delichon 8mo ago
> Clearly, these insiders have figured out a way to cash in on information. Whether that's kosher is out-of-scope here To the extent that the value of prediction markets is in their power to predict, insider trading is kosher. Wholesome even.
- moduspol 8mo ago
  Indeed. For those of us not gambling, it's really quite beneficial.
  - kibwen 8mo ago
    Prediction markets can only pay out based on public information, which means that prediction markets can only "reveal information" like this for things that would have been public knowledge anyway. And insiders are always risking that leaking their insider info might influence the outcome of the bet against them (like if leaking the date of a covert military operation causes the operation to be rescheduled), so they're financially incentivized to wait as long as possible before tacitly revealing that information. So prediction markets are the worst possible way of revealing hidden information: you will only learn about things you would have already known, and only when it's too late to make any use of that knowledge.
    - moduspol 8mo ago
      There's also a financial incentive to get your bets in early, while the odds are still in your favor. The longer you wait, the higher the risk that your secret becomes public knowledge. I agree it's not perfect, but I think you're underplaying a lot of the value.
    - smcin 8mo ago
      You're overlooking that sudden, unexplained or counterintuitive movements in the actual prediction market itself, well before the event occurs/market resolves can themselves convey information, about what apparent insiders think (or whales want to manipulate the market to think). Obvious example: Polymarket now has 69(!) markets involving Iran: https://polymarket.com/predictions/iran https://polymarket.com/predictions/iran Consider the timing of those markets wrt 2026 national elections in US, Israel, also Sweden, legislative elections in France, Germany (as canaries for their next general elections) plus a possible change in UK PM, plus any possible Ukraine or Venezuela outcomes. And of course events in the stock market or energy markets make certain outcomes more/less likely. Also, on Polymarket traders often buy and sell before a market resolves, to exploit patterns in other traders. And consider what happens at major media e.g. CNN now they've partnered with Kalshi, wrt whether the broadcasting certain predictions/viewpoints/interviewees get boosted/suppressed.
- tedsanders 8mo ago
  Bribing employees to disclose confidential information entrusted to them is not kosher nor wholesome. I consider corporate insider trading on these markets to be analogous - if you're an employee and you trade, you are selling your employer's info for money. Nearly every employer would fire employees caught giving away confidential information for personal bribes. In the stock market, Matt Levine likes to say that insider training is about theft, not fairness. You can be prosecuted for merely sharing info with a friend on a golf course who then proceeds to trade. Your crime is not trading (you didn't even trade), but misappropriating information you were entrusted with and not authorized to sell.
  - pousada 8mo ago
    The market economy is not about fairness but about ruthless power. The worlds most influential people demonstrate that only power matters; that the world order we built last century through unimaginable suffering and violence matters less than securing their own personal gain; that law, morals, and order were just dreams of the weak
- PollardsRho 8mo ago
  What about bets without insider participation, where you want the market to function as an aggregator of educated guesses? OP has one reaction to insider trading, but I imagine a very common alternative would be "those insiders make their money off of bettors like me, I shouldn't participate." Some questions are clearly insider-proof, but I imagine many questions have insiders who don't bet on Polymarket. If Polymarket is going to be a good prediction market, surely it should incentivize people to make predictions on those questions too?
- empath75 8mo ago
  It's not that it's cheating _in the market_, but if people have an obligation to their employers, etc, to keep information confidential, then they are stealing from their employer by cashing in on it, as sure as if they had taken money from the till.
bstsb 8mo ago
iirc polymarket doesn't explicitly rule against this, and neither does the law. prediction trading like this operates as "commodities" trading, so they have no obligation to prevent this, and indeed they have an financial incentive to let it continue (assuming others don't leave the platform!)
- aleksiy123 8mo ago
  I would go even further and say that it's a vital part of prediction markets as the intended theoretical goal is accuracy of predictions.
- BoxFour 8mo ago
  > neither does the law I don’t think that’s right. Prediction markets fall under CFTC oversight, and the CFTC absolutely has insider trading rules. We just haven’t seen any enforcement yet. Partly because the space is still new, and partly because enforcement priorities have been uneven lately (to put it mildly). The CFTC has already signaled it’s starting to look more closely at insider trading in prediction markets. It's almost certainly just a matter of time. It's pretty likely a future administration will clamp down on this, if the current one doesn't.
syntaxing 8mo ago
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.
- carefree-bob 8mo ago
  It's not just a gambling addiction, but many people consider themselves smarter than the average person, and nature's way of punishing these people is creating things like stock markets and polymarkets.
- doomslayer999 8mo ago
  Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.
  - conformist 8mo ago
    By “not terrible” you mean “bad but not very bad” and not “good” right?
    - kibwen 8mo ago
      "High variance, slightly-negative EV shots on a long time horizon" is a gambling addict's way of justifying the old adage, "sure, we're losing money on each sale, but we'll make up for it in volume!"
      - hattmall 8mo ago
        Disagree, it's way more like overall our sales are losing money, but the long term plan is to get a buy out. A strategy that works for a non-trivial amount of startups. The idea is that if you play incorrectly long enough eventually a bigger better that's more wrong then you will come along.
  - tyre 8mo ago
aleksiy123 8mo ago
Out of curiosity, is it possible to see everyone's bets and positions in real time? Or is the info only available later? I'm guessing that bots predicting insiders and copying positions is already a thing.
- SamPatt 8mo ago
  You can see when they buy or sell a position. It's on the blockchain so it's all public. And yes, copying positions is called copy-trading and it's extremely popular. Orders aren't public though. Only the actual trades. This is important because by the time the trade is known by others very often the edge is gone. Especially if you have other people watching the same trader and they all try to copy the trade at the same time.
  - swingboy 8mo ago
    If it takes so long for the actual trades to show up then why is copy-trading popular?
    - 0x3f 8mo ago
      Not all strategies are low-latency, so you can copy trade someone with a buy and hold approach. For example someone you think is an insider or whale who might influence the outcome.
  - nubg 8mo ago
    Could the "trend-setter" not just buy, sell, buy, sell and own everybody who moves after him?
    - SamPatt 7mo ago
      Yes. This is why copy-trading often fails.
currymj 8mo ago
there is some inevitable "insider trading" in commodities markets. for example if you're a giant agricultural company, and you want to hedge the price of soybeans, you have some extremely relevant insider information about the soybean market. but you're still allowed to trade soybean futures. very different than securities. if prediction market contracts really are regulated as commodities, then presumably a lot of insider trading must be legal, although there must be limits of one kind or another and probably if you do something really egregious you might be prosecuted under some legal theory.
- joncooper 8mo ago
  An agricultural company hedging the price of soybeans is precisely hedging, not speculation. The insider information they have is their supply/demand/pricing picture. That's different than the colloquial definition of insider information which I've always taken to tie to event occurrence (or not).
  - hansvm 8mo ago
    Why not both? They also have insider information and aren't required to limit their trades to those which would hedge the crops.
conformist 8mo ago
> “Hedge funds invest a ton in "alternative data", like credit card transaction data or satellite-imagery (are Walmart's parking lots full?) and need to process as much relevant information as possible to make predictions that are relevant to investments. “ Ah yes the famous credit card data and Walmart parking lots example that hedge funds were giving a few years ago in every interview and news article. Safe to assume that specifically these data sets are not what you should look at to make money.
w10-1 8mo ago
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?) Regardless, polymarket seems to be on balance corrupting, by monetizing and normalizing use of inside information, which violates agency principles. It's not clear that it really offers hedging or predictive benefits. When trading firms do better (after data discovery and analysis), there's some evidence they're better than other firms, and you can trust them with some money. But when there's a public prediction market, the only benefit is to the insiders.
- _alternator_ 8mo ago
  This is largely the classical objection to prediction markets. But prediction markets do have value to outside of the markets because people want to know the future.
- deleted 8mo ago
  [deleted]
- peterjliu 8mo ago
  Post author here: To clarify, this is not a post from Polymarket. This is talking about using Compound AI (product I'm working on) to query Polymarket data, including finding insiders, just as a fun example analysis you could do. Often you need a well-calibrated probability of a future event to feed into some other analysis, and Polymarket is pretty great for that. An example is how much insurance (hedge) to buy for some disastrous event.
  - jwpapi 8mo ago
    Why dont you just copy the trades?
    - genidoi 8mo ago
tombert 8mo ago
It baffles me that Polymarket is legal. Even if there wasn't any kind of insider betting going on, it just seems so disgusting to turn literally everything into a casino. There's a bet going on right now about Jesus coming back before 2027 [1], and a part of me wants to do it because I'm pretty confident Jesus isn't coming back by the end of the year (or any year), but it seems kind of wrong to try and extract money out of people who are gambling away their money. [1] https://polymarket.com/event/will-jesus-christ-return-before-2027 https://polymarket.com/event/will-jesus-christ-return-before...
- 0x3f 8mo ago
  Polymarket's legality has not yet been tested in many places, although I don't personally object to it being legal, there's a chance it might not be. Also, I'd advise against betting on the Jesus market. You can't actually read the price as a probability here due to time value of money, opportunity cost, etc. So you'd lose money (or at best, gain nothing) by betting against it. It's priced correctly.
  - tombert 8mo ago
    > Also, I'd advise against betting on the Jesus market. You can't actually read the price as a probability here due to time value of money, opportunity cost, etc. So you'd lose money (or at best, gain nothing) by betting against it. It's priced correctly. Yeah, and assuming Jesus doesn't come back that's only about a 3.6% return rate, which is what Treasury Bills are getting right now [1]. At that point I might as well do that and avoid paying state tax on my interest. [1] https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value=2026 https://home.treasury.gov/resource-center/data-chart-center/...
    - 0x3f 8mo ago
      Exactly, the existence of alternatives is mostly what keeps the price non-zero. I think counterparties who are actually betting on Jesus returning will be quite rare. So I wouldn't feel bad about taking money from saps, more about just getting a bad rate of return for yourself.
coldtea 8mo ago
>Prediction markets have been called "truth machines" because anyone who has information missing from the market can profit. That sounds like "insider trading" machines, or "scam" machines, rather than truth machines.
- testaccount28 8mo ago
  yes, they allow you to pay people who have information about the future for that information, in a distributed manner. this is great if, like many people, you want information about the future.
  - coldtea 8mo ago
    Information about the future without power to do anything about it (except bet on it), like is the case for most information and most people, is useless.
    - testaccount28 8mo ago
      surely this criticism applies as well to... any information.
  - tester756 8mo ago
    That sounds cool and fancy in theory, but how do you find that information among the noise? like if 50 ppl vote A, 45 people vote B and 1 person who actually knows their shit votes B? How do you find it? By amount?
    - 0x3f 8mo ago
      Apart from minor effects, the price is the probability. If you 'know your shit', you have more confidence and thus bid up or down until there are no more counterparties willing to accept your price, and thus the price settles at approximately the expert/insider probability.
    - jstanley 8mo ago
nodesocket 8mo ago
There is 100% insider-trading and manipulation of prediction markets. It's absurd some of the markets that are created. The most glaring example was this years super bowl halftime show. They had markets on songs Bad Bunny would sing, which song he would sing first, etc. You're telling me the thousands of people who had access to practices and information would not wager on this?
- 0x3f 8mo ago
  You can just stand near the stadium during practice and glean this info. I believe people did exactly that.
deleted 8mo ago
[deleted]
yunohn 8mo ago
> it's clear prediction markets like Polymarket incentivize sharing information I severely dislike these euphemisms used by prediction market enthusiasts. What exactly is the value of information like “most searched person on Google in year N”? Creating 10s of options to answer this question via gambling on Polymarket/Kalshi does not help anyone except their fellow degenerates. Heck, even events like “by N date the USA invade country X” also offer no real value, except for the insider circle to front run their own invasion and profit from it. Even worse, apparently they provide anonymity and cover to illegal participants (eg obviously US citizens) just like crypto exchanges like Binance did. I truly question the sanity of those who believe that prediction markets are providing a positive force in this world.
- bertil 8mo ago
  I'm very tempted to agree that those markets are not providing a positive force, given the focus on questions for which a small group of people know the answer ahead of time. They are not sharing that information because it is not in their interest, and insiders likely won’t have a great time for long. However, there is large value for some people in knowing when a country will be invaded: if you live there, you know when to leave; if you are an airline, when to stop scheduling flights there, or, if a lot of people are in the first group, up until when to schedule many more flights to get them out. But I’m positive the invading army would prefer some kid in a basement didn’t make one Lieutenant General on the committee obscenely rich overnight. I wished the focused on markets where many people are part of the decision, like elections. There, the wisdom of the crowds would add some value.
  - yunohn 8mo ago
    > there is large value for some people in knowing when a country will be invaded Are there any examples of people/companies trusting degenerate gamblers on prediction markets and making real life-changing decisions? All the examples I’ve seen are exactly what I started in my original post - the insider circle opening a massive position on the right invasion date mere minutes/hours before they actually do it. This is useful to precisely nobody! And it happens because they are insiders, who want to avoid risk of exposure. Not to share their godly wisdom with the world for others benefit.
ttul 8mo ago
Trading on non-public information in prediction markets is illegal (in the United States) if the information was obtained through fraud, deception, a breach of trust—such as compromising a position of privilege—or from a confidential government source. For example, if you work at Google and know that Gemini 3 will be released on a certain date, trading on that insight is illegal because you are legally misappropriating your employer’s proprietary information. Furthermore, even if you did not personally breach a position of privilege to get the information, executing the trade can still be prosecuted as federal wire fraud if doing so violates the prediction platform's terms of service. However, if you trade on prediction markets using insider information that was gained WITHOUT fraud, deception, or a breach of trust, then so long as the market's terms of service allow it, you can go ahead and trade on that information. Polymarket is a prime example of this: unlike traditional financial exchanges, its Terms of Service do not explicitly forbid everyday users from trading on inside information. Instead, the platform relies on a catch-all rule prohibiting activity that violates "applicable laws." This means that as long as you acquired the inside information legally—without hacking, stealing, or breaching a duty of confidentiality—Polymarket permits you to capitalize on it, treating your informational advantage as a feature that ultimately makes the market's odds more accurate.
- nubg 8mo ago
  Lmao, this user is an AI bot, as he admits in his bio. Frankly, the many ellipses gave it away, too. Edit: He removed the passage.
  - ttul 8mo ago
    Which user is an AI bot?
    - ttul 8mo ago
      (I am not a bot, but I definitely use LLMs to help me conduct research and write well-informed comments here)
      - 7mo ago
seydor 8mo ago
In many ways this gambling infatuation is worse than cryptocurrency, and with possibly more damaging externalities
- goodquestions 8mo ago
  MAnifold also bad
- JKCalhoun 8mo ago
  Hmmm... crypto is bad for the planet though.
  - DennisP 8mo ago
    If you're talking about crypto mining, all of the big smart contract platforms that can run something like Polymarket are running on proof of stake. Their energy usage is comparable to any other internet protocol with a similar amount of traffic.
    - JKCalhoun 7mo ago
      Thanks. Proof of work, now proof of stake—I clearly don't keep up with crypto mining.
      - DennisP 7mo ago
        Yeah most of the attention is still on Bitcoin and that'll be proof of work forever.
tamimio 8mo ago
I mean, why is this surprising when you have this https://www.reuters.com/investigations/inside-trump-familys-global-crypto-cash-machine-2025-10-28/ https://www.reuters.com/investigations/inside-trump-familys-...
vicchenai 8mo ago
[dead]
theptip 8mo ago
> An interesting question is if agents are much better at querying data than humans, do we even need the awkwardness of SQL, It’s an interesting question, my hunch is that for now “in-distribution reasoning” is going to be much more effective than custom data query APIs. But perhaps not! I’d read that paper.
paperclipmaxi 8mo ago
[dead]
justaj 8mo ago
When I went to the main article link [0] (which for some reason was linked from a Twitter comment), it said "Page is not supported" It's also not on archive.org Wayback Machine it seems. So can anyone please copy and paste the article contents here? Thanks. 0: http://x.com/i/article/2024235288512569344 http://x.com/i/article/2024235288512569344
cranberryturkey 7mo ago
[dead]
sharp_runner_84 7mo ago
The real alpha on Polymarket isn't in trying to predict events better than the market -- it's in the market microstructure. Price discrepancies between Kalshi and Polymarket on the same event can persist for minutes because the two venues have different participant bases and settlement rules. Kalshi is USD-settled with KYC, Polymarket is USDC on Polygon with pseudonymous wallets. And because Polymarket's CLOB runs on-chain, you can literally watch competing bots' strategies by tracing their contract interactions.

159 points by somerandomness 8mo ago

ralph84 8mo ago

Not sure why the dumb money keeps playing. If you're not the insider the person you're trading against is.

taylorius 8mo ago
"the dumb money"
pocksuppet 8mo ago
Because you think you can predict the probability of the insider insidering each way and place a bet before they insider
doomslayer999 8mo ago
Because its an event contract with a defined upside/downside and time horizon. You know exactly what you stand to lose and gain and when. Makes it a valuable part of some intricate financial strategies.
- tokenless 8mo ago
  Plus casinos exist. Why do people play blackjack.

delichon 8mo ago

> Clearly, these insiders have figured out a way to cash in on information. Whether that's kosher is out-of-scope here To the extent that the value of prediction markets is in their power to predict, insider trading is kosher. Wholesome even.

moduspol 8mo ago
Indeed. For those of us not gambling, it's really quite beneficial.
- kibwen 8mo ago
  Prediction markets can only pay out based on public information, which means that prediction markets can only "reveal information" like this for things that would have been public knowledge anyway. And insiders are always risking that leaking their insider info might influence the outcome of the bet against them (like if leaking the date of a covert military operation causes the operation to be rescheduled), so they're financially incentivized to wait as long as possible before tacitly revealing that information. So prediction markets are the worst possible way of revealing hidden information: you will only learn about things you would have already known, and only when it's too late to make any use of that knowledge.
  - moduspol 8mo ago
    There's also a financial incentive to get your bets in early, while the odds are still in your favor. The longer you wait, the higher the risk that your secret becomes public knowledge. I agree it's not perfect, but I think you're underplaying a lot of the value.
  - smcin 8mo ago
    You're overlooking that sudden, unexplained or counterintuitive movements in the actual prediction market itself, well before the event occurs/market resolves can themselves convey information, about what apparent insiders think (or whales want to manipulate the market to think). Obvious example: Polymarket now has 69(!) markets involving Iran: https://polymarket.com/predictions/iran https://polymarket.com/predictions/iran Consider the timing of those markets wrt 2026 national elections in US, Israel, also Sweden, legislative elections in France, Germany (as canaries for their next general elections) plus a possible change in UK PM, plus any possible Ukraine or Venezuela outcomes. And of course events in the stock market or energy markets make certain outcomes more/less likely. Also, on Polymarket traders often buy and sell before a market resolves, to exploit patterns in other traders. And consider what happens at major media e.g. CNN now they've partnered with Kalshi, wrt whether the broadcasting certain predictions/viewpoints/interviewees get boosted/suppressed.
tedsanders 8mo ago
Bribing employees to disclose confidential information entrusted to them is not kosher nor wholesome. I consider corporate insider trading on these markets to be analogous - if you're an employee and you trade, you are selling your employer's info for money. Nearly every employer would fire employees caught giving away confidential information for personal bribes. In the stock market, Matt Levine likes to say that insider training is about theft, not fairness. You can be prosecuted for merely sharing info with a friend on a golf course who then proceeds to trade. Your crime is not trading (you didn't even trade), but misappropriating information you were entrusted with and not authorized to sell.
- pousada 8mo ago
  The market economy is not about fairness but about ruthless power. The worlds most influential people demonstrate that only power matters; that the world order we built last century through unimaginable suffering and violence matters less than securing their own personal gain; that law, morals, and order were just dreams of the weak
PollardsRho 8mo ago
What about bets without insider participation, where you want the market to function as an aggregator of educated guesses? OP has one reaction to insider trading, but I imagine a very common alternative would be "those insiders make their money off of bettors like me, I shouldn't participate." Some questions are clearly insider-proof, but I imagine many questions have insiders who don't bet on Polymarket. If Polymarket is going to be a good prediction market, surely it should incentivize people to make predictions on those questions too?
empath75 8mo ago
It's not that it's cheating _in the market_, but if people have an obligation to their employers, etc, to keep information confidential, then they are stealing from their employer by cashing in on it, as sure as if they had taken money from the till.

bstsb 8mo ago

iirc polymarket doesn't explicitly rule against this, and neither does the law. prediction trading like this operates as "commodities" trading, so they have no obligation to prevent this, and indeed they have an financial incentive to let it continue (assuming others don't leave the platform!)

aleksiy123 8mo ago
I would go even further and say that it's a vital part of prediction markets as the intended theoretical goal is accuracy of predictions.
BoxFour 8mo ago
> neither does the law I don’t think that’s right. Prediction markets fall under CFTC oversight, and the CFTC absolutely has insider trading rules. We just haven’t seen any enforcement yet. Partly because the space is still new, and partly because enforcement priorities have been uneven lately (to put it mildly). The CFTC has already signaled it’s starting to look more closely at insider trading in prediction markets. It's almost certainly just a matter of time. It's pretty likely a future administration will clamp down on this, if the current one doesn't.

syntaxing 8mo ago

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.

carefree-bob 8mo ago
It's not just a gambling addiction, but many people consider themselves smarter than the average person, and nature's way of punishing these people is creating things like stock markets and polymarkets.
doomslayer999 8mo ago
Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.
- conformist 8mo ago
  By “not terrible” you mean “bad but not very bad” and not “good” right?
  - kibwen 8mo ago
    "High variance, slightly-negative EV shots on a long time horizon" is a gambling addict's way of justifying the old adage, "sure, we're losing money on each sale, but we'll make up for it in volume!"
    - hattmall 8mo ago
      Disagree, it's way more like overall our sales are losing money, but the long term plan is to get a buy out. A strategy that works for a non-trivial amount of startups. The idea is that if you play incorrectly long enough eventually a bigger better that's more wrong then you will come along.
- tyre 8mo ago

aleksiy123 8mo ago

Out of curiosity, is it possible to see everyone's bets and positions in real time? Or is the info only available later? I'm guessing that bots predicting insiders and copying positions is already a thing.

SamPatt 8mo ago
You can see when they buy or sell a position. It's on the blockchain so it's all public. And yes, copying positions is called copy-trading and it's extremely popular. Orders aren't public though. Only the actual trades. This is important because by the time the trade is known by others very often the edge is gone. Especially if you have other people watching the same trader and they all try to copy the trade at the same time.
- swingboy 8mo ago
  If it takes so long for the actual trades to show up then why is copy-trading popular?
  - 0x3f 8mo ago
    Not all strategies are low-latency, so you can copy trade someone with a buy and hold approach. For example someone you think is an insider or whale who might influence the outcome.
- nubg 8mo ago
  Could the "trend-setter" not just buy, sell, buy, sell and own everybody who moves after him?
  - SamPatt 7mo ago
    Yes. This is why copy-trading often fails.

currymj 8mo ago

there is some inevitable "insider trading" in commodities markets. for example if you're a giant agricultural company, and you want to hedge the price of soybeans, you have some extremely relevant insider information about the soybean market. but you're still allowed to trade soybean futures. very different than securities. if prediction market contracts really are regulated as commodities, then presumably a lot of insider trading must be legal, although there must be limits of one kind or another and probably if you do something really egregious you might be prosecuted under some legal theory.

joncooper 8mo ago
An agricultural company hedging the price of soybeans is precisely hedging, not speculation. The insider information they have is their supply/demand/pricing picture. That's different than the colloquial definition of insider information which I've always taken to tie to event occurrence (or not).
- hansvm 8mo ago
  Why not both? They also have insider information and aren't required to limit their trades to those which would hedge the crops.

conformist 8mo ago

> “Hedge funds invest a ton in "alternative data", like credit card transaction data or satellite-imagery (are Walmart's parking lots full?) and need to process as much relevant information as possible to make predictions that are relevant to investments. “ Ah yes the famous credit card data and Walmart parking lots example that hedge funds were giving a few years ago in every interview and news article. Safe to assume that specifically these data sets are not what you should look at to make money.

w10-1 8mo ago

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?) Regardless, polymarket seems to be on balance corrupting, by monetizing and normalizing use of inside information, which violates agency principles. It's not clear that it really offers hedging or predictive benefits. When trading firms do better (after data discovery and analysis), there's some evidence they're better than other firms, and you can trust them with some money. But when there's a public prediction market, the only benefit is to the insiders.

_alternator_ 8mo ago
This is largely the classical objection to prediction markets. But prediction markets do have value to outside of the markets because people want to know the future.
deleted 8mo ago
[deleted]
peterjliu 8mo ago
Post author here: To clarify, this is not a post from Polymarket. This is talking about using Compound AI (product I'm working on) to query Polymarket data, including finding insiders, just as a fun example analysis you could do. Often you need a well-calibrated probability of a future event to feed into some other analysis, and Polymarket is pretty great for that. An example is how much insurance (hedge) to buy for some disastrous event.
- jwpapi 8mo ago
  Why dont you just copy the trades?
  - genidoi 8mo ago

tombert 8mo ago

It baffles me that Polymarket is legal. Even if there wasn't any kind of insider betting going on, it just seems so disgusting to turn literally everything into a casino. There's a bet going on right now about Jesus coming back before 2027 [1], and a part of me wants to do it because I'm pretty confident Jesus isn't coming back by the end of the year (or any year), but it seems kind of wrong to try and extract money out of people who are gambling away their money. [1] https://polymarket.com/event/will-jesus-christ-return-before-2027 https://polymarket.com/event/will-jesus-christ-return-before...

0x3f 8mo ago
Polymarket's legality has not yet been tested in many places, although I don't personally object to it being legal, there's a chance it might not be. Also, I'd advise against betting on the Jesus market. You can't actually read the price as a probability here due to time value of money, opportunity cost, etc. So you'd lose money (or at best, gain nothing) by betting against it. It's priced correctly.
- tombert 8mo ago
  > Also, I'd advise against betting on the Jesus market. You can't actually read the price as a probability here due to time value of money, opportunity cost, etc. So you'd lose money (or at best, gain nothing) by betting against it. It's priced correctly. Yeah, and assuming Jesus doesn't come back that's only about a 3.6% return rate, which is what Treasury Bills are getting right now [1]. At that point I might as well do that and avoid paying state tax on my interest. [1] https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value=2026 https://home.treasury.gov/resource-center/data-chart-center/...
  - 0x3f 8mo ago
    Exactly, the existence of alternatives is mostly what keeps the price non-zero. I think counterparties who are actually betting on Jesus returning will be quite rare. So I wouldn't feel bad about taking money from saps, more about just getting a bad rate of return for yourself.

coldtea 8mo ago

>Prediction markets have been called "truth machines" because anyone who has information missing from the market can profit. That sounds like "insider trading" machines, or "scam" machines, rather than truth machines.

testaccount28 8mo ago
yes, they allow you to pay people who have information about the future for that information, in a distributed manner. this is great if, like many people, you want information about the future.
- coldtea 8mo ago
  Information about the future without power to do anything about it (except bet on it), like is the case for most information and most people, is useless.
  - testaccount28 8mo ago
    surely this criticism applies as well to... any information.
- tester756 8mo ago
  That sounds cool and fancy in theory, but how do you find that information among the noise? like if 50 ppl vote A, 45 people vote B and 1 person who actually knows their shit votes B? How do you find it? By amount?
  - 0x3f 8mo ago
    Apart from minor effects, the price is the probability. If you 'know your shit', you have more confidence and thus bid up or down until there are no more counterparties willing to accept your price, and thus the price settles at approximately the expert/insider probability.
  - jstanley 8mo ago

nodesocket 8mo ago

There is 100% insider-trading and manipulation of prediction markets. It's absurd some of the markets that are created. The most glaring example was this years super bowl halftime show. They had markets on songs Bad Bunny would sing, which song he would sing first, etc. You're telling me the thousands of people who had access to practices and information would not wager on this?

0x3f 8mo ago
You can just stand near the stadium during practice and glean this info. I believe people did exactly that.

deleted 8mo ago

[deleted]

yunohn 8mo ago

> it's clear prediction markets like Polymarket incentivize sharing information I severely dislike these euphemisms used by prediction market enthusiasts. What exactly is the value of information like “most searched person on Google in year N”? Creating 10s of options to answer this question via gambling on Polymarket/Kalshi does not help anyone except their fellow degenerates. Heck, even events like “by N date the USA invade country X” also offer no real value, except for the insider circle to front run their own invasion and profit from it. Even worse, apparently they provide anonymity and cover to illegal participants (eg obviously US citizens) just like crypto exchanges like Binance did. I truly question the sanity of those who believe that prediction markets are providing a positive force in this world.

bertil 8mo ago
I'm very tempted to agree that those markets are not providing a positive force, given the focus on questions for which a small group of people know the answer ahead of time. They are not sharing that information because it is not in their interest, and insiders likely won’t have a great time for long. However, there is large value for some people in knowing when a country will be invaded: if you live there, you know when to leave; if you are an airline, when to stop scheduling flights there, or, if a lot of people are in the first group, up until when to schedule many more flights to get them out. But I’m positive the invading army would prefer some kid in a basement didn’t make one Lieutenant General on the committee obscenely rich overnight. I wished the focused on markets where many people are part of the decision, like elections. There, the wisdom of the crowds would add some value.
- yunohn 8mo ago
  > there is large value for some people in knowing when a country will be invaded Are there any examples of people/companies trusting degenerate gamblers on prediction markets and making real life-changing decisions? All the examples I’ve seen are exactly what I started in my original post - the insider circle opening a massive position on the right invasion date mere minutes/hours before they actually do it. This is useful to precisely nobody! And it happens because they are insiders, who want to avoid risk of exposure. Not to share their godly wisdom with the world for others benefit.

ttul 8mo ago

Trading on non-public information in prediction markets is illegal (in the United States) if the information was obtained through fraud, deception, a breach of trust—such as compromising a position of privilege—or from a confidential government source. For example, if you work at Google and know that Gemini 3 will be released on a certain date, trading on that insight is illegal because you are legally misappropriating your employer’s proprietary information. Furthermore, even if you did not personally breach a position of privilege to get the information, executing the trade can still be prosecuted as federal wire fraud if doing so violates the prediction platform's terms of service. However, if you trade on prediction markets using insider information that was gained WITHOUT fraud, deception, or a breach of trust, then so long as the market's terms of service allow it, you can go ahead and trade on that information. Polymarket is a prime example of this: unlike traditional financial exchanges, its Terms of Service do not explicitly forbid everyday users from trading on inside information. Instead, the platform relies on a catch-all rule prohibiting activity that violates "applicable laws." This means that as long as you acquired the inside information legally—without hacking, stealing, or breaching a duty of confidentiality—Polymarket permits you to capitalize on it, treating your informational advantage as a feature that ultimately makes the market's odds more accurate.

nubg 8mo ago
Lmao, this user is an AI bot, as he admits in his bio. Frankly, the many ellipses gave it away, too. Edit: He removed the passage.
- ttul 8mo ago
  Which user is an AI bot?
  - ttul 8mo ago
    (I am not a bot, but I definitely use LLMs to help me conduct research and write well-informed comments here)
    - 7mo ago

seydor 8mo ago

In many ways this gambling infatuation is worse than cryptocurrency, and with possibly more damaging externalities

goodquestions 8mo ago
MAnifold also bad
JKCalhoun 8mo ago
Hmmm... crypto is bad for the planet though.
- DennisP 8mo ago
  If you're talking about crypto mining, all of the big smart contract platforms that can run something like Polymarket are running on proof of stake. Their energy usage is comparable to any other internet protocol with a similar amount of traffic.
  - JKCalhoun 7mo ago
    Thanks. Proof of work, now proof of stake—I clearly don't keep up with crypto mining.
    - DennisP 7mo ago
      Yeah most of the attention is still on Bitcoin and that'll be proof of work forever.

tamimio 8mo ago

I mean, why is this surprising when you have this https://www.reuters.com/investigations/inside-trump-familys-global-crypto-cash-machine-2025-10-28/ https://www.reuters.com/investigations/inside-trump-familys-...

vicchenai 8mo ago

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theptip 8mo ago

> An interesting question is if agents are much better at querying data than humans, do we even need the awkwardness of SQL, It’s an interesting question, my hunch is that for now “in-distribution reasoning” is going to be much more effective than custom data query APIs. But perhaps not! I’d read that paper.

paperclipmaxi 8mo ago

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justaj 8mo ago

When I went to the main article link [0] (which for some reason was linked from a Twitter comment), it said "Page is not supported" It's also not on archive.org Wayback Machine it seems. So can anyone please copy and paste the article contents here? Thanks. 0: http://x.com/i/article/2024235288512569344 http://x.com/i/article/2024235288512569344

cranberryturkey 7mo ago

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sharp_runner_84 7mo ago

The real alpha on Polymarket isn't in trying to predict events better than the market -- it's in the market microstructure. Price discrepancies between Kalshi and Polymarket on the same event can persist for minutes because the two venues have different participant bases and settlement rules. Kalshi is USD-settled with KYC, Polymarket is USDC on Polygon with pseudonymous wallets. And because Polymarket's CLOB runs on-chain, you can literally watch competing bots' strategies by tracing their contract interactions.