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> Regardless, polymarket seems to be on balance corrupting, by monetizing and normalizing use of inside information,

This is a common take on "inside information", but for most people this opinion is totally unaligned with their own goals. The people who benefit from "no insider trading" in any market, are a small group of active traders, some institutional, some not.

For literally everyone else, insider trading is a net win. Insider trading improves price discovery. If you passively invest then you benefit from the price being more accurate when whatever fraction of your paycheck goes into the market.

I don't know your own situation, maybe you are one of those few traders who needs information to spread a certain way in order to make money. For everyone else, don't be fooled into promoting an idea against your own interests.

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In fact, a lot of people claim that the main point of prediction markets is to give the general public better predictions, and insider participation actually helps with that.
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Post author here: To clarify, this is not a post from Polymarket.

This is talking about using Compound AI (product I'm working on) to query Polymarket data, including finding insiders, just as a fun example analysis you could do.

Often you need a well-calibrated probability of a future event to feed into some other analysis, and Polymarket is pretty great for that. An example is how much insurance (hedge) to buy for some disastrous event.

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Why dont you just copy the trades?
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If I'm an insider with 100% confidence, I'll take all offers at a certain price as long as I can afford it. Similar story for lower levels of confidence (but still inside info). There won't necessarily be any left for you to copy at a viable price.
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The examples didn’t look like they’ve completely emptied the orderbook
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Because there's always some uncertainty and capital limits. But the uncertainty about the outcome is itself inside info, and that's compounded with your own uncertainty about the insider as a copy trader. So the insider will empty out certain price levels only, and your certainty is strictly less than theirs, meaning you have even fewer viable levels to buy.
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> Similar story for lower levels of confidence

therefore, the polymarket betting odds will reflect the truth - even if that info is a secret that nobody else but the insider knows. And if this is the case, then even an outsider could make use of the odds as a source of info which would ensure that market efficiency (which is about the flow of information) is high.

So what's wrong with insider trading again?

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That someone with inside information will e.g. make 500% while those late to the party e.g. only get 10%? (of course your example is not very realistic to begin with)
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So is any kind of business illegal? Making investments?
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It rewards blatant corruption? What's the benefit is the bigger question.
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Past performance is not an indicator of future performance.
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Shouldn't it be if you suspect they are executed by an insider?
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You can't be sure that they are an insider or lucky, just from onchain data.
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If they make single market predictions with high accuracy it is very very likely they are
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No vigilant insider is making a series of "single market predictions with high accuracy" on the same account. They would make unlinkable bets on fresh accounts.
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> No vigilant insider is making a series of "single market predictions with high accuracy" on the same account.

There seem to be quite a few non-vigilant insiders. That's the very premise of the post we're discussing.

This is unsurprising to anyone who's seen the various ways people get busted for insider trading in equities.

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Also insider trading is A-OK on prediction markets!
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This is largely the classical objection to prediction markets. But prediction markets do have value to outside of the markets because people want to know the future.
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I think you might misunderstand the value preposition. Polymarket wants insider trading. That's the whole point. They'll eventually cave in to PR pressure and deviate from the original purpose, though.
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