KOL: How can I make $100,000 through arbitrage in the prediction market?

The pricing of the same event on different platforms may vary, and this is where the opportunity lies.

Written by: Pix

Compiled by: Luffy, Foresight News

Most people gamble in prediction markets, while I arbitrage in prediction markets. Here are the specific strategies I used to earn $100,000 from decentralized, inefficient prediction markets.

Step 1: Understand the Game Rules

Prediction markets allow you to bet on the outcomes of real-world events, for example:

• "Will Ethereum rise to $5000 by the end of the year?"
• "Will MrBeast run for president?"
• "Will Kanye West issue tokens?"

Each market has different user groups, and each group has its own biases. This means that the pricing of the same event can vary across different platforms, and that is where the opportunity lies.

Example: If platform A "will" quote 0.4 USD and platform B "will not" quote 0.55 USD, then regardless of the outcome, you can lock in a profit of 0.05 USD, which is arbitrage.

Step 2: Find Your Advantages

The most effective strategy for me is multi-outcome markets, where pricing errors are most likely to occur.

Example:

• Who will win the F1 championship this weekend?
• Which party will win the UK election?
• Who will be the next eliminated in "Love Island"?

In theory, the sum of the probabilities of all outcomes should be 100%, but in reality, it is common to see the sum reach 110%.

Reason: Platforms often charge hidden fees ("excess premium"), and the odds are determined by users, resulting in a large amount of inefficient pricing.

Step 3: How to Determine If There Are Arbitrage Opportunities

Core rules:

• Find the same event on different platforms;
• Choose the lowest price for each result;
• If the total price is below 1 dollar, arbitrage is possible.

Real case: Who will be the next pope?

The quotes from the two platforms are as follows:

The strategy is to buy all outcomes, ensuring that one will be realized, which guarantees a profit of 1 dollar. Each trade yields a profit of 0.021 dollars (2.1% risk-free return), and this is arbitrage. You are not betting on who will become the pope, but rather on the two platforms being unable to agree on who will become the pope. And when they disagree, you can make money.

The liquidity of Myriad is much worse, but there are two other websites with price differences that are closer. If you pay attention to more markets, you will find greater advantages.

I usually only engage in arbitrage when the APY is above 60% (APY = (interest rate spread / days to resolve) × 365).

The event ends 29 days later in this case:

(0.021 / 29) × 365 ≈ 26.4% APY (below my threshold of 60%, give up).

If the event ends after 7 days:

(0.021 / 7) × 365 ≈ 109.5% APY (Decisively enter the market).

Step Four: Race Against Time

Predictive market arbitrage is a delayed game:

After a price discrepancy occurs, there is usually only a few minutes time window, rather than a few hours; rumors spreading, platform updates lagging, etc., can lead to price differences, and your advantage exists only during this period.

If possible, please automate this part to use price alerts on Discord, Telegram, and Twitter. Sometimes I can spot price differences just by muscle memory. The faster you act, the more you earn. Hesitate for 5 minutes, and the price difference disappears. The best spread I've achieved is 18%, and the profit is quite substantial.

It is important to remind that ensure there are available funds on each platform and be clear about the fees.

Step 5: Early Exit

Most people wait for the results to be announced, but I took profits before the results were clear.

Assuming I buy all the outcomes at $0.94, I would have a $0.06 margin. I don't need to wait for the results; if the market tightens, I can sell at $0.98 or $0.99, and I will exit.

This can significantly increase the APY and quickly switch to the next market.

Additional Tips

• Searching for overlapping events: For example, "Trump wins the 2024 election" and "Republican victory" may have hidden arbitrage;
• Target small markets: more pricing errors, less competition;
• Utilize niche platforms: larger price discrepancies, potential airdrop rewards;
• Carefully read the settlement rules: one word may change the outcome;
• Carefully verify: confirm the order book, transaction price, and calculate including all fees.

Summary

I made $100,000 in just over 2 months, with periods of both calm and busyness. The greater the volatility, the more the price difference, but even when the market is calm, there is always the next inefficient market waiting to be discovered.