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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 detect
by 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 agoThis 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 agoPost 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 agoWhy dont you just copy the trades?
- genidoi 8mo agoPast performance is not an indicator of future performance.
- kylecazar 8mo agoShouldn't it be if you suspect they are executed by an insider?
- genidoi 8mo agoYou can't be sure that they are an insider or lucky, just from onchain data.
- bergen 8mo agoIf they make single market predictions with high accuracy it is very very likely they are
- genidoi 8mo agoNo vigilant insider is making a series of "single market predictions with high accuracy" on the same account. They would make unlinkable bets on fresh accounts.
- BoxFour 8mo ago> No vigilant insider is making a series of "single market predictions with high accuracy" on the same account. There seem to be quite a few non-vigilant insiders. That's the very premise of the post we're discussing. This is unsurprising to anyone who's seen the various ways people get busted for insider trading in equities.
- meetingthrower 8mo agoAlso insider trading is A-OK on prediction markets!
- raincole 8mo agoI think you might misunderstand the value preposition. Polymarket wants insider trading. That's the whole point. They'll eventually cave in to PR pressure and deviate from the original purpose, though.
- ses1984 8mo agoSome of the things people bet on can be decided by a single person. The more accurate the markets get, the greater the incentive for insiders to spoil it. That doesn’t benefit anyone but the insider and probably has a net negative on everyone else.
- alphazard 8mo ago> Regardless, polymarket seems to be on balance corrupting, by monetizing and normalizing use of inside information, This is a common take on "inside information", but for most people this opinion is totally unaligned with their own goals. The people who benefit from "no insider trading" in any market, are a small group of active traders, some institutional, some not. For literally everyone else, insider trading is a net win. Insider trading improves price discovery. If you passively invest then you benefit from the price being more accurate when whatever fraction of your paycheck goes into the market. I don't know your own situation, maybe you are one of those few traders who needs information to spread a certain way in order to make money. For everyone else, don't be fooled into promoting an idea against your own interests.
- DennisP 8mo agoIn fact, a lot of people claim that the main point of prediction markets is to give the general public better predictions, and insider participation actually helps with that.
- airstrike 8mo agoI'm honestly puzzled by this take. Clearly the people who benefit from insider trading in any market are those doing the insider trading, not all market participants. The argument is not that Polymarket et al are "insider trading only" but rather that insider trading in those markets is not regulated so people can get ahead of trades based on confidential information and make a lot of money off of all the suckers gambling their money away on ridiculously frivolous bets. If you don't see the problem with that, you're complicit, misinformed or brainwashed. A similar issue is that of market manipulation, since many markets in these platforms can be directly manipulated by participants in manners as easily as spamming some words on an earnings call.
- alphazard 8mo ago> If you don't see the problem with that, you're complicit, misinformed or brainwashed. The problem that I imagine you see with this, is that it doesn't conform to a particular, special, notion of fairness that you think the market should have. Informed parties have an edge over uninformed parties. This edge is "unfair" if you believe the market should be a lottery. The market is designed to pay people with accurate beliefs, by taking from people with inaccurate beliefs. Everyone's belief is valued based on its accuracy, and the market is fair in that sense. Fairness is actually irrelevant to the societal good the market provides, which is to produce accurate prices. A third party, who doesn't participate, shouldn't care about the market being "fair", they should care about it giving good information. > A similar issue is that of market manipulation, since many markets in these platforms can be directly manipulated by participants in manners as easily as spamming some words on an earnings call. If you are betting on what a person will say, and the person knows about the market, that is a chaotic system. If you bid the price away from max entropy then you deserve the outcome.
- Lu2025 8mo agoYep it's rotten. I think the intuitive revulsion many feel toward the Polymarket is simply due to the unfairness of it.
- cowthulhu 8mo agoPrediction markets should be accurate, not fair. If people want to gamble without doing the work of finding some alpha, they should head to a casino, not a prediction market.
- fsckboy 8mo ago>But when there's a public prediction market, the only benefit is to the insiders. false. all the conclusions economists draw in microeconomic theory about efficient markets are based on pricing that reflects symmetric information. secrets are asymmetric. trading on inside information drives the market price in the direction it should be moving, making the market more efficient, a benefit to all participants in the market. this is not a defense of trading on inside information, simply pointing out the mechanics.
- airstrike 8mo agoWe're not solving for efficient pricing at the expense of one insider reaping all the benefits because they already either knew or set the price before hand.
- fsckboy 8mo agoif you have no knowledge of any inside information and you are trying to make a buy/sell investment decision, your decision benefits from the price being as accurate as possible. That is what every individual is "trying to solve" so it's a net benefit.
- airstrike 8mo agoexcept there is nothing to buy/sell here other than the prediction itself. Or do you also think it would make sense, in a hypothetical scenario, to buy options on a stock price that is already known by some in advance? There’s a reason you’re not allowed to trade on insider information. You’re totally missing the point here.