Prediction Markets: A New Battleground in the Crypto Economy
Prediction markets are emerging as a new battleground in the crypto economy, with the most informed traders competing with casual bettors for profits. According to a report from market research firm 10x Research, most users behave more like sports bettors than disciplined traders, trading “dopamine and narratives for discipline and edge.” The report highlights that accuracy and profit are determined not by the masses, but by a small, informed elite who assess probability, hedge risk, and extract premium from retail-driven longshots.
Rising liquidity and retail participation are prompting professional trading desks to increase their forecast market activity and take advantage of the spreads and “misinformation asymmetries” that arise from this market structure, according to 10x. This trend is evident in the growing activity on platforms like Polymarket, where 
The report is a worrying sign for casual traders looking to make easy money in prediction markets, as blockchain data suggests that most users are losing their initial investment. According to blockchain data from Dune, only about 16.7% of wallets on Polymarket are making profits, while the remaining 83% have suffered losses, as shown in the 
Perfect Odds Fuel Insider Concerns
The impeccable track record of some prediction market accounts raises concerns about possible insider trading, as certain users seem to win every time. Polymarket user pony-pony boasts a 100 percent win rate with over $77,000 in realized profits by betting on events related to artificial intelligence development company OpenAI, prediction market data aggregator Polymarket Money said in a Monday post. Another user, AlphaRaccoon, also sparked insider accusations after earning over $1 million in a single day by successfully winning 22 of 23 bets related to Google search trends, as shown in the 
Meanwhile, concerns about the reliability of Polymarket data on third-party data dashboards are mounting after a Paradigm researcher discovered a bug that doubled the prediction market’s trading volume, Cointelegraph reported earlier Tuesday. The error overstates the primary volume metrics used to measure forecast market activity, including notional volume, which counts the number of contracts traded, and cash flow volume, which measures the dollar value traded at the time of each trade, Paradigm researcher Storm wrote in a Tuesday X post.
However, the inflated volumes on data dashboards are due to errors in data interpretation and not wash trading, a fraudulent and illegal practice in which companies buy and trade the same instrument to create a false impression of growing market activity. Paradigm’s newly discovered error has been “validated” by several data dashboards, including AlliumLabs and DefiLlama, which are now updating their Polymarket dashboards to eliminate the double counting error. Magazine: Train AI agents to make better predictions… for token rewards
For more information, visit https://cointelegraph.com/news/prediction-markets-polymarket-retail-insider-concerns?utm_source=rss_feed&utm_medium=rss_tag_blockchain&utm_campaign=rss_partner_inbound
