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Comment by phpnode | Hacker News Reader

The problem with making this bet is that the value of the underlying crypto can move by far more than the possible 15% return while the result is pending.

2 months is more than enough for the price to double or halve and people want to be able to exit to fiat at a moment's notice when they think things are heading south.

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Poly.Market which he mentions (and where I bet on the US election) just uses a stablecoin (USDC) pegged to the US dollar. Same situation for the DAI he mentions he used. So this is an already solved issue.

I've used Poly.market a few times and been pretty happy with it - they use a second layer network, so after depositing, trades are fairly cheap (you just pay a market maker fee, no crypto miner fee as far as I can tell). Downside is that the outcome is provided by the poly.market creators, but your actual bets are non-custodial.

The fees were quite expensive before they started using Matic.

Pretty much all the crypto betting protocols use stablecoins (mostly pegged to the $), people arent betting in eth/btc. Vitalik placed bets on https://catnip.exchange/ so would have been in dai.

Also on the topic of stability, Rai launched this week so we now have non-pegged stable assets backed by eth -> https://www.reflexer.finance/

I mean for anyone who wants to use BTC any anything other than an investment vehicle this is how it’s gonna be. BTCs value to non-currency speculators is as a settlement layer of last resort for people that can’t access or don’t want to use foreign exchange markets. You want to get in, do your transfer, and go back to fiat as fast as possible specifically because of the volatility.

There are cash-based markets like Predictit where you could've made a similar bet. Predictit charges 5% withdrawal fees + 10% of profits, but if you expect a 15% ROI, it's still profitable.

The fiat-based prediction markets tend to limit the number of people in a particular markets, the size of positions in the market, and a number of other aspects of the market in a way which make it difficult to seize apparent opportunities and to limit the possible returns from doing so, even before considering the way that their fees eat up returns.

These limits are because the ones you're thinking of are research projects, not in fact betting markets (even though as an individual you can treat them as betting markets just fine). This makes them accessible (legally) to US residents.

Betfair is a British gambling firm, and isn't a research project, when Betfair's "Did Donald Trump win the US presidential election?" and "Did Joe Biden win the US presidential election?" closed it had hundreds of millions of pounds of bets across those two questions.

I got paid, as in I put cash in and a couple of weeks later more cash was paid out to my bank account when BetFair closed it, for knowing that Donald Trump did not win that election in December.

It was even possible (though of course risky) to buy the lows and sell the highs as MAGA rallied when they thought the Kraken had been released, or when Rudy was going to prove everyone wrong, or whatever other nonsense.

I was actually underwater for more than 50% of the two weeks between placing my "bet" and the cash returned, because MAGA were bidding up the "Donald Trump won" position even as it became increasingly obvious that they'd lose everything.

PredictIt didn't have this anomaly where Trump had a 15% chance of winning. After Georgia called the election the percentage went above 95%.

Oh, it definitely did. Maybe not to the same degree as the crypto markets (never looked at them), and there were certainly spikes this way and that, but you could get Trump NO cheaper than 90c well into December.

The Texas v. Pennsylvania case getting swatted down by SCOTUS was probably the last of the cheap shares where it was worth depositing money just to play, but if you already had some money in your account it was worth taking the obvious bets all the way to the end.

edit: went back and checked one of the markets to refresh my memory. Yep, check the 90-day chart. Dec 6 "NO" on a Republican win was only 84c!

https://www.predictit.org/markets/detail/2721/Which-party-wi...

edit2: here's another hilarious one.

https://www.predictit.org/markets/detail/5554/Will-Donald-Tr...

Yep, "Will Trump win the popular vote" closed on Nov 24th while still trading at 8 cents. The popular vote. Jesus Christ. For reference he lost the popular vote by 7 million.

I'd actually be curious to know if there was a crypto-market equivalent to that one, because I want to believe most of that pricing was due to PI's limits. For example, one Trump bettor maxing out his $850 limit of 7c shares, requires 14 Biden bettors maxing out $850 of 93c bets to be his counterparty. With a 5,000 trader limit that means that there might be just a handful of Trump-won-landslide bettors vs a few thousand No-he-didn't bettors with a lot more invested, all maxed out and unable to move the price further. But I don't know if that shook out differently in the crypto space with no limits.

You are correct, thanks for providing those sources.

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