Brian Armstrong’s last-minute crypto shout-out turned a $4,000 prediction market right into a punchline. With a couple of phrases, the Coinbase CEO made each wager on “Bitcoin,” “Ethereum,” and “Web3” pay out directly.
It was a skinny market, the place the most important winner took residence solely $111, based on Poymarket Analytics.
But when Armstrong’s impromptu phrase salad confirmed how ridiculous prediction markets can get, New York Metropolis mayoral market, with $22 million in open curiosity, exhibits how severe they’ve develop into. Shifting the chances there by simply 10 share factors would now price roughly $1 million in concentrated shopping for energy.
That’s as a result of Polymarket’s open curiosity displays actual cash sitting in a liquidity pool, not simply the sum of theoretical wagers ready to settle. Each commerce interacts with an automatic pricing curve backed by collateral, which means odds shift regularly fairly than being set by direct matches between merchants.
The largest positions present simply how deep that pool runs: whales like “dubdubdub2” and “asfgh” every maintain over $2 million backing Zohran Mamdani, based on Polymarket Analytics, whereas many of the giant “No” merchants are already sitting on heavy losses and have little room so as to add capital.
Due to this, any new wager positioned “out of the cash”, for instance, shopping for Andrew Cuomo at lengthy odds or promoting Mamdani close to 95%, is shortly absorbed by the market maker’s curve, which adjusts costs primarily based on provide and demand.
To maneuver the chances by 10 share factors, a dealer must push by way of hundreds of thousands of {dollars} in opposing orders, round $1 million in concentrated shopping for or promoting, earlier than the curve begins to meaningfully shift. The market’s dimension and construction make small makes an attempt at manipulation nearly immediately diluted by current capital.
Latest polling backs up the market’s view. A Fox Information survey exhibits Mamdani main Cuomo by 16 factors, whereas an Emerson School ballot places his benefit at 25, proof that his 95% odds replicate voter sentiment fairly than manipulation.
Maybe there was additionally a misunderstanding that polls measure what voters say they’ll do, whereas prediction markets measure how assured merchants are that these voters will really do it, so a candidate polling at 50% doesn’t essentially have a 50% likelihood of profitable.
Ackman’s criticism missed what merchants already knew: if Mamdani’s 95% odds had been really inflated, anybody may have exploited the mispricing.
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As CSPTrading.eth put it, proper now a wager on Mamdani is only a assured 5% return in 10 days.
