Ben

Building on prediction markets.

[Ben @BenjaminDuthoit]

Microstrategy polymarket insiders have the opportunity to do the funniest thing: using their position to manipulate financial markets for a huge profit.

Details below ⬇️

Yesterday a bunch of obvious insiders (clean accounts, trade only one market, huge size) front-ran the MicroStrategy announcement by trading prediction markets related to a BTC purchase by the company.

See these accounts for more details:
https://t.co/mvRf253IPE
https://t.co/6mGyu63Ivo
https://t.co/YjHP9WQIjm
https://t.co/YkRPBNBgu5
https://t.co/xrz4W9NXrC
https://t.co/Ji19UcBod0
https://t.co/8qynHIpiQz
https://t.co/GQMnIeRVrO

They all made a decent amount of money, a few tens of thousands of dollars.
But they could go for a much bigger payday.

Profit from inside trading MicroStrategy markets on Polymarket is limited by the thin liquidity. If they want to win big they have to find a deeper market.

Now that they are identified as Microstrategy insiders, all eyes are on them. Millions of traders are looking for their next move.

They can take advantage of this by faking an inside trade. A MicroStrategy BTC purchase announcement doesn’t have much effect on bitcoin price. But a MicroStrategy liquidation would be catastrophic for bitcoin and the price would freefall.

The process is simple.

1. MicroStrategy insiders open a huge fat short (leveraged) position on Bitcoin.

2. MicroStrategy insiders aggressively buy “Yes” contracts on this market:
https://t.co/Evf6vCVoFo
They should be able to “clean” the sell-side of the orderbook with ~30k$.

If they want the message to be crystal clear, they can also buy all the available “Yes” contracts on these markets:
https://t.co/h8yZxGXtPn
https://t.co/YdsyjGMdsI

3. At that point crypto traders would panic and sell their bitcoin holdings fearing Saylor's liquidation. Futures traders would open large short positions to try to profit from the move. The price would plunge.
It’s time for MicroStrategy insiders to close their short position on Bitcoin and take profits.

If they want to optimize, they can now buy BTC (preferably spot) to also profit from the move up, when the market will realize that MicroStrategy will not really be liquidated.
Finally, they sell their "Yes" contracts to what's left of the liquidity in prediction markets.

This tactic should be highly profitable. If I were a malicious actor, I would try to buy those accounts and execute it. But I’m not, and all of this is probably illegal everywhere.

Don’t do this at home.

[Ben @BenjaminDuthoit]

@nicoco89poly ils achètent moins cher car ils copient un trade maker? (même dans ce cas quelque chose m'échappe car il faudrait qu'ils soient eux aussi maker)

[Ben @BenjaminDuthoit]

@mazz_dev @nicoco89poly le problème c'est qu'il a peut être envie d'accumuler au fur et à mesure plutôt que de lump sum

[Ben @BenjaminDuthoit]

@udiWertheimer @notsoeasymoney Screenshot is misleading, there was no trade at this price

[Ben @BenjaminDuthoit]

@HarryDCrane Obvious troll but the relative age effect is real

[Hyperliquid @HyperliquidX]

HyperCore will support outcome trading (HIP-4). Outcomes are fully collateralized contracts that settle within a fixed range. They are a general-purpose primitive that are useful for applications such as prediction markets and bounded options-like instruments. There has been extensive user demand in both of these areas, and builders will likely think of novel applications as well.

Outcomes bring non-linearity, dated contracts, and an alternative form of derivative trading that does not involve leverage or liquidations. The outcome primitive expands the expressivity of HyperCore, while composing with other primitives such as portfolio margin and the HyperEVM.

Outcomes are a work in progress and currently only being tested on testnet. Canonical markets based on objective settlement sources will be deployed once technical development is complete. Canonical markets will be denominated in USDH. Pending user feedback, the infrastructure will be extended to permissionless deployment.

[Ben @BenjaminDuthoit]

https://t.co/CRjdT1WUtc

[Ben @BenjaminDuthoit]

@Euanker @BoringBiz_ Often it is the same personality traits that make people raise a huge bankroll and lose it all. Many such cases in crypto

[Ben @BenjaminDuthoit]

@holy_moses7 @DextersSolab Safe strategy

[Ben @BenjaminDuthoit]

@holy_moses7 @DextersSolab one of the lastest inventions of Polymarket slop posters https://t.co/zeXA5cY3U2

[Nekt0 @Nekt_0]

The safest strategy for trading on Polymarket

We buy bets with the least likely and most likely outcomes.

We don't need to guess which bet will be the winning one.

The strategy is called carry trade, and it is one of the best.

Example:

The market has just started:
- we buy the unlikely bet ($0.001-$0.02)

Towards the end of the market:
- we buy the most likely bet ($0.97-$0.99)

> earn from 0.5 to 3% on sure bets
> can earn up to 100-200x on unlikely bets

Beneficial for us:

If the least likely option begins to grow and becomes obvious, but we break even or make a profit by buying the obvious outcome.

Many bots use this strategy

I recently showed a trader who made $80k in profit in 20 days using this strategy.

[Ben @BenjaminDuthoit]

@DaedalusRsch The exact architecture and mechanism of a dark pool is not trivial at all. Do you have a good example in mind?

[Ben @BenjaminDuthoit]

@jay_azhang FWIW OpenAI pre-IPO trades at 775B valuation on hyperliquid: https://t.co/4yRA2XSC4h

[Ben @BenjaminDuthoit]

@CarOnPolymarket 100% inescapable security measure

[Ben @BenjaminDuthoit]

@gigiialc You are describing futarchy applied to the corporate world https://t.co/xkr9gYcwuE

[Ben @BenjaminDuthoit]

@kaledora What do you think of pre-IPO markets?

[Ben @BenjaminDuthoit]

@mikhryc0x @philtsa @TrendleFi 😬

[Ben @BenjaminDuthoit]

Just flipped @philtsa on the @TrendleFi leaderboard

[Ben @BenjaminDuthoit]

@mikhryc0x @philtsa @TrendleFi I don't see you though...

[Ben @BenjaminDuthoit]

@philtsa @TrendleFi 😁

[Ben @BenjaminDuthoit]

Brian Armstrong has been futarchy pilled by @robinhanson

[Ben @BenjaminDuthoit]

@nic_carter @kwinten_blomme Brillant article for a semi-enlightened audience like myself. Has anyone written a good faith counter argument in the same format?