Most people gamble in prediction markets, while I arbitrage in prediction markets. Here's my specific strategy for earning $100,000 from decentralized, inefficient prediction markets.
Step One: Understand the Game Rules
Prediction markets allow you to bet on the outcomes of real-world events, such as:
"Will Ethereum reach $5,000 by the end of the year?"
"Will MrBeast run for president?"
"Will Kanye West issue a token?"
Each market has different user groups, each with their own biases. This means the same event can be priced differently on different platforms, and that's where the opportunity lies.
Example: If Platform A quotes "Yes" at $0.4 and Platform B quotes "No" at $0.55, you can lock in a $0.05 profit regardless of the outcome - that's arbitrage.
Step Two: Find Your Advantage
My most effective strategy is multi-outcome markets, which are most prone to mispricing.
Examples:
- Who will win F1 this weekend?
- Which party will win the UK election?
- Who will be eliminated next on Love Island?
Theoretically, the probabilities of all outcomes should sum to 100%, but in reality, they often reach 110%.
Reason: Platforms typically charge implicit fees ("excess premium"), and odds are determined by users, leading to widespread inefficient pricing.
Step Three: How to Determine if an Arbitrage Opportunity Exists
Core rules:
- Find the same event on different platforms;
- Choose the lowest price for each outcome;
- If the total price is below $1, you can arbitrage.
Real-world case: Who will be the next Pope?
Quotes on two platforms:
The strategy is to buy all outcomes, one of which will definitely be realized, ensuring you get $1. Each transaction profits $0.021 (2.1% risk-free return) - that's arbitrage. You're not betting on who will become Pope, but betting that two platforms can't agree on who will become Pope. When they disagree, you make money.
Myriad's liquidity is much lower, but there are two other websites with even closer price differences. If you pay attention to more markets, you'll find greater advantages.
I typically only arbitrage when APY exceeds 60% (APY = (Price Difference / Resolution Days) × 365).
In this example, the event ends in 29 days:
(0.021 / 29) × 365 ≈ 26.4% APY (below my 60% threshold, skip).
If the event ends in 7 days:
(0.021 / 7) × 365 ≈ 109.5% APY (definitely enter).
Step Four: Race Against Time
Prediction market arbitrage is a game of delay:
After price differences appear, you usually only have a few minutes, not hours; rumors, platform update lags, etc., create price differences, and your advantage only exists during this time.
If possible, automate this part, use price alerts on Discord, Telegram, and Twitter. Sometimes I can spot price differences by muscle memory alone. The faster you act, the more you earn. Hesitate for 5 minutes, and the price difference disappears. My best price difference was 18%, which was quite substantial.
Remember to ensure available funds on each platform and be clear about fees.
Step Five: Exit Early
Most people wait for the result, but I profit and exit before the outcome is clear.
Suppose I buy all outcomes for $0.94, giving me a $0.06 price difference. I don't need to wait for the result; if the market tightens, I can sell at $0.98 or $0.99 and exit.
This significantly increases APY and allows quick transition to the next market.
Additional Tips
Find overlapping events: e.g., "Trump wins 2024 election" and "Republican Party wins" might have hidden arbitrage;
Target small markets: more mispricing, less competition;
Use niche platforms: larger price differences, potential airdrop rewards;
Read settlement rules carefully: one word might change the outcome;
Verify meticulously: check order books, transaction prices, calculate including all fees.
Conclusion
I earned $100,000 in just over two months, with periods of calm and busy times. The more volatile the market, the more price differences exist, but even in calm markets, the next inefficient market always awaits discovery.
