Unchained - How to Trade Prediction Markets Without an Opinion on the Event - Ep. 979

Episode Date: December 13, 2025

Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsor! Walrus The prediction market meta is piping hot and everyone wants a piece of the pie. In this episode of Unchained, 10x Research founder Markus breaks down what the competition boils down to. Plus, will other platforms follow Polymarket's lead and launch a token? He also walks through a “near certain” trade nestled in Polymarket and shares 10 strategies that can be used to trade prediction markets without an opinion.  One key nugget: “It's the wisdom within the crowd.” Guest: Markus Thielen, CEO of 10x Research Previous appearance on Unchained: How to Invest in This Bitcoin Downtrend: Bits + Bips Links Unchained: Paradigm Claims Polymarket Trading Figures Are Double Counted Polymarket Opens US App to Waitlisted Users Intercontinental Exchange to Invest $2 Billion in Polymarket Crypto.com and Kalshi Lead Prediction Market Coalition Setup Kalshi Hits $11B Valuation After $1B Raise: Report Timestamps: 🚀 00:00 Introduction  💡 3:07 Why Markus says prediction market adoption is still in its infancy 👀 6:23 Are speculators abandoning bitcoin for prediction markets? 🧏 8:10 How trading prediction markets differ from crypto markets ⚖️ 11:48 How Polymarket and Kalshi compare in strengths and weaknesses ⚡️ 15:12 Why Markus thinks Polymarket and Kalshi are likely to remain the dominant players  📝 19:15 What traders should consider when choosing a prediction market platform  💥 23:05 How the POLY Airdrop could give Polymarket an edge ⁉️ 26:39 Will other prediction markets launch a token? 💡 33:19 How risks in trading prediction markets differ from crypto markets 🧠 36:31 Markus walks through a “near certain” Bitcoin trade paying 63% annualized 🤯 39:58 Strategies to trade prediction markets without having an opinion ❕️ 51:48 Why Markus avoids “moon shot” trades ⚠️ 54:11 How to trade by finding “wisdom within the crowd” 🤺 1:00:17 How prediction markets enable hedging against real world outcomes 📃 1:02:34 Final thoughts on how traders should approach prediction markets Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchained, your no high resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream. Before we get started, just a quick reminder, nothing you hear on Unchained is investment advice. The show is for informational and entertainment purposes only, and my guest and I may hold assets discussed in the show. For more disclosures, visit Unchained Crypto.com. Also, you'll notice something new in today's episode. Instead of our usual ad spots, we're introducing a different sponsored format. We interviewed our sponsor, Walrus, a project we actually use at Unchained for data storage, and throughout the episode, you'll hear short excerpts from that interview. Even though those segments are sponsored, we also think the material is genuinely interesting and worth your time. We're going to start with the first of those clips now. Maybe we'll, we could put it into two categories. there's a very practical hands-on problem with data,

which is in this AI era, we need gigantic amounts of data. And not only do we need gigantic amounts of data, that data is then used to create even more data. So we are exponentially increasing the amount of data every single day. This is very expensive to store, and it's expensive, not just in terms of money, but in computing power and time and speed.

And then you have different types of data. So structured data, all well and good, especially when we're talking about a blockchain. But the more we're using blockchains and AI together and big computations are it's unstructured data. we don't really have or haven't really had anything super performant, anywhere to store it or calculate it. And that's actually how Walrus was originally envisaged.

That small, you know, small data, structured data that can be stored on a blockchain. But the longer that blockchain exists, the more data there is, the slower it is, the more expensive it is. And then once you start, want to do things like, store large unstructured files, like a video or a song, it's really far too expensive to do that on a blockchain. So we built Morris as not just data storage, but a whole data layer to handle that sort of amount of data. As it turns out, we've found out since we have been lives that people want to use up for small data too. So we have also now solved that problem

with a new technical release called Quilt. Today's guest is Marcus Tielin, CEO of 10X research. Welcome, Marcus. Hey, Laura, thanks for having me. Yeah, excited to chat with you. So the prediction market space is really hot right now. The two biggest players, Polymerk and Kalshi, both have sky-high valuations. They're intensely competitive with each other, as I'm sure most people on X know.

And that's probably only going to escalate now that they're newly competing on U.S. turf with the entrance of Polly Market into this country. But Gemini, Robin Hood, there are others who are also getting into the game. And at the same time, the category is facing some regulatory headwinds. So, you know, despite all that, none of that has stopped prediction markets from just increasing in, you know, trading volumes every month. November was just under about $2 billion for that month, at least for Polymarket in Kalshi. How do you view this current moment in the trajectory of prediction markets? Where do you think we are in their adoption? Yeah.

So, of course, you know, the interesting aspect is really that actually the volumes have increased and the volumes are actually relatively constant now. I think we're trading actually around a billion dollars now per week. So that's quite elevated. And it's almost like as when Bitcoin started to decline from, you know, $125,000, you know, that's really the volumes and the activity started to increase. So the number of users actually increased from $70,000 to almost $250,000, again, per week. So these are actually really big numbers.

A lot of people are involved. And of course it has to do with that Kalti and Puli Market, you know, together raised around $3 billion during the last couple of weeks. So there has been a lot of, you know, market. firepower really raised. And I think that's when we look into 2026. You know, a lot of the stuff is on the horizon that it's going to broaden out. And I think more investors and more traders are actually using the platform, you know,

to hedge some of the economic risks, some of the macro risk, and just kind of like, you know, to speculate. But around 90% of all the volume is still sports betting. So we on the crypto side, it's really like a small niche, but nevertheless it's growing. And I think it's quite interesting when we look at it from various estimates. So I would say we are still at its infancy because, you know, these platforms weren't really, you know, anywhere a year or two ago. Volumes really started to pick up only really after the Trump election. That was the first, you know, huge push.

But I think when we look at, you know, last month, you know, activity really, you know, how many users actually visited those platforms, you know, as a comparison, we have around 40 million users visiting Robin Hood, 30 million. I think it's like $32 million for Coinbase and we have nearly $20 million for a Polly market. So it's definitely where these prediction markets are becoming more interesting from a user perspective and attracting a lot more volume

on all sorts of things. And I think that's where we are in the beginning and when we enter 2026, a lot of the stuff is moving higher and as you said already Gemini just won a prediction market license as well so the competition is heating up and a lot of people want to kind of go into a space to it. And I just wanted to ask you about, well, what seemed like a connection that you made.

You said that just as the price of Bitcoin was going down, that trading in prediction markets was going up, are you implying there that some of the people who had been trading Bitcoin are now switching to trading in prediction markets? Or like, how would you figure that out? I mean, it just, I think it just seems a I think it would be really far-stretched that you have suddenly people, you know, turning them back on, you know, crypto exchanges and suddenly trading crypto or other trades really on prediction markets. I think that's sort of like something that we try to look into, we try to figure out, but it's really not the case.

And when we ask, for example, our subscribers, not too many are trading. I think a lot of people are interested in it, but also the volumes are not necessarily there. A lot of the contracts, a lot of the bets are relatively small. so they don't really have the liquidity size that, you know, we are used from the crypto markets where, you know, volumes are $100 billion, you know, $200 billion, sometimes even on, you know, massive markets. And it's still a very niche market. But nevertheless, I think there are some interesting opportunities that can be found.

But it nevertheless, I think it continues with the gamification of, you know, financial markets. People want to be entertained. And it's just a matter of, you know, how you approach the markets from an entertainment or from a probability perspective. but nevertheless it just broadens out and it's just sort of another tool we can look at it from, you know, from historically how people, for example, arbitrage various spreads, various products.

And that's how we kind of approach this exercise to look into prediction markets. Is there a way to structurally arbitrage certain traits or not? And, you know, out of curiosity, like it sounds like you trade both. You trade the crypto markets and prediction markets. How would you characterize the difference in terms of, you know, trading in those two types of markets? So, of course, you know, I think what a lot of people are not really aware of,

but prediction markets are sort of, you know, exotic option trading, you know, strategies. It's really, you know, about the probability and understanding the probability and really being fast with the news. And I think it's, you know, more determined outcomes. it's really like a yes or no, it's not halfway. It's, you know, one party loses, another party wins, really. With, of course, some of the exchanges in the middle versus, of course, with assets, you know, on crypto exchanges, like everybody can win who has exposure to it. So I think it's, of course, a very different, you know, narrative.

It's a very different, different approach. And I would say these two are, you know, vastly really different. But I think it's really the matter of, you know, how to really approach the prediction markets because again, you know, I think in a hardcore option terminology is really like one-touch barrier options that people need to understand how to price them and the probability of those factors and not necessarily, you know, in crypto buying into the narrative, buying into the theme or, you know, the story really. And I think that's kind of like really the big difference. But again, I think for sophisticated traders, which you have on both, you know, venues or in both

kind of categories, I think they approach it very similarly. But of course, everybody is aware that a lot of the crypto exchanges have their own, you know, internal trading teams or treasury teams or, you know, liquidity providing teams. You know, they might be affiliated or not. You know, of course, a lot of the stuff has come out, you know, in the aftermath of the last kind of like two, three years, really, you know, how these exchanges engineered liquidity initially, you know, because they need it and a sophisticated market maker on the other side. It's not really possible to match retail.

against retail on day one if there's no liquidity. And without liquidity, nobody really trades on exchanges. And I think we have seen this, you know, with the early days of Bitmex, where I remember Arthur Hayes was, you know, giving presentations in 2015 in Hong Kong, you know, presenting, basically, I have all these Korean retail investors that are buying leveraged futures, you know, with 200% implied, you know, volatility of funding rates, really. and he wanted institutional traders on the other side to really arbitrage the market. And I think here it's very similar where these trading teams,

and I think what a lot of people are also not aware of, that there are also sophisticated trading teams on polymarket, on Kalti. Some of them have their own team, some want to build their own trading teams. And these are people that's doing this 24 hours a day really and really sophisticated. And I think that's where the similarity is a little bit in building liquidity, especially because there's so many unique contracts that people can trade and unique bets, but you still need market makers to be willing to take the other sides because otherwise you will not attract the flow.

So it's really kind of the patient market maker versus the impatient taker, really. And I think that's a little bit similar as in crypto. So there are some similarities here, but overall the structure is quite differently. So nevertheless, I think it helps for sophisticated places. to move from one platform to another if they are arbitrage opportunities. And so I want to ask about the two biggest players, you know, as we mentioned, there's a whole bunch of other ones getting into the space. But let's just narrow in on at least, you know, the competition as we see now, which primarily is between Polymark and Kalshi. And, you know,

we kind of alluded to the fact earlier that very soon they will be competing head to head in the the Polymarket app is sort of in the U.S. is sort of just rolling out. You know, it's like in a beta period. Polymarket raised $2 billion at a $12 billion valuation. Kalshi raised $1 billion at an $11 billion valuation. How do you kind of handicap the two companies in terms of their relative strengths and weaknesses? So, you know, the key difference is that Polly Market is really, you know, a crypto-based platform. and on-ramp is, you know, very, very quick or opening account is, you know, super fast.

I think for non-U.S. investors, you know, somebody was just sending me a screenshot. These on the waiting list number 240,000. So there is a lot of people wanted to onboard versus, of course, if you're not based in the U.S., you're on board, you know, literally takes two minutes and you can fund your account with cryptocurrency. And again, this whole process, you know, it's a similar playbook at some of the crypto exchanges in the early days used to do, you know, all you need to do, they have is really an email account, and then basically you get a security code,

and then that's it, and then you're locked on, and then you have a wallet address, and you can fund the wallet with a different, you know, cryptocurrency or with a stable coin, and then basically you can, you know, place bets, and this whole process takes, like, less than two minutes, versus, you know, if you're, of course, regulated in the U.S., if you're trying to be in the U.S., you know,

the process might take a little bit longer because it has a long backlog. And I think that's, you know, one difference really. But it's also in terms of, you know, liquidity. I think that's how institutions look at it. It's some type of bets that people look at it. As I was saying, around 90% of the bets seem to be really on the sports betting side. So everything else from, you know, event contracts, you know, or crypto ideas that people are trading on is relatively small.

And of course, when we go into the elections, I think around $3.7 billion was was at stake really at the U.S. election. So that's when really the market heats up. And I think that's where there's sort of like overlap really on the sports side. They overlap on some of the political outcome bets. And I think the differentiation will be, I think, less and less. I think it's really in terms of like how some of the bets are being refraised, let's say on the crypto side.

But nevertheless, I think they will just converge wherever the volume will go, but I think people can also, of course, put up their own bets in the sense. You can propose your own bets. So it's just a matter of you coming up with a great idea and it's getting approved. And then you can place the bet on both sides. And, you know, if there's different odds, you can basically arbitrage the market there as well. So there are different, you know, their differences in style, in regulation right now.

But, you know, but this is going to converge. And because they're both looking for, you know, the U.S. market, which is, of course, is the biggest market there is. And what about these different new competitors that we mentioned? So Gemini has its Gemini Titan. Robin Hood just had an announcement with Susquehanna. I forget what month this was, but just a few months ago, Limitless had a controversial token launch.

I'm sure there's others, but I wondered how you kind of look at these different new entrants and which ones you think could be viable competitors. editors. I mean, I personally think it's really these two big ones. I think they dominate everything because in the end, I think it's all about, you know, liquidity and volumes and attracting the volume very quickly. I think we have seen this on the cryptocurrency exchange side as well where really volume is key. And unless there's, you know, like a regulatory event that, for example, of course, you know, heard some exchanges, you know, in the past. you know, from Mount Gox to, you know, Bitmex and so on.

But, you know, we have seen how, you know, Binx has grown, and Binings, you know, with their volumes, has attracted, of course, more and more and has manifested themselves really as, you know, the leader. And I think everybody else needs to really come up with really smart strategy to attract some of the volumes. I think we have seen this, how summer exchanges have tried to move into the option space and, you know, win their market share.

But I think it's very similar where if you have a smaller prediction, market, you need the volume, and for the volume, we need some professional traders. You mentioned already Saskohana, who are very active, of course, on the professional making side. And I think they're working with various of these exchanges, because, you know, that's really their role from the market maker's side. But it's really, you know, how do you engineer the volume? And I think this has always been the issue for crypto exchanges. And I think this will be the same for these prediction market exchanges. And so at the moment, like between the different competitors, who do you think is ahead in terms of volume?

So, of course, it depends a little bit on contracts, but I think, of course, you know, Pauley Market is a little bit ahead. Again, if you look at some of the monthly visitor numbers, you know, for last month, it was around $5 million for Kalti and it was $19 million for Pauly Market. So I think there is, of course, a larger lead. And I think it has to do, of course, with Kalti was focusing a bit more on U.S. investors, whereas as a public market is, of course, global. And I was saying the onboarding is a little bit easier. They have been, I think, they have a little, you know, leg up really over the last kind of like, you know, one to two years being, you know, pre-speaking at some of these, you know, crypto conferences or other events and being a little bit more out there.

Maybe in terms of marketing, that's why they have a, you know, a little. you know, step ahead, really. But in the end, you know, as you said, the valuations is very similar. You know, Kalti has probably, you know, a better revenue model because they're charging a fee. You know, that is a little bit elevated for some or, you know, versus Pauley Market is, is a little bit, you know, less fee generating right now. But I think they can, because it's like crypto exchange, they don't need a lot of the over-hanging. And again, they have not really focused on the US where maybe there's a lot of, you know, a lack of compliance that wasn't really that important, but of course, there's all changes now because they're entering the U.S. market.

So I think there has been some differences, but they're all going to converge. It's just really like a question, you know, what is really the strategy to win more users and, of course, to win and to partner with these, you know, bigger market makers because, again, it's all about liquidity. And that has always been the big problem for crypto currency. exchanges. If there's no liquidity, then there's no retail investors, then there's no interest investor. And that's so like how the ball really rolls down the hill. And I think it's very similar here as well. Yeah. And this might go to the controversy that was on Twitter this

week. But when I look at how the block, you know, it has different bar charts that show the volume. And it actually looks like in recent months, like literally in the last two months, Cal she might have overtaken polymarket. But I'm not sure exactly how this is being calculated because, yeah, like just, I'm not going to get into all the details on that, but for various reasons, some of the charts, like I would have to dig into it a little bit more to really understand what's going on. But, yeah, maybe some of it also depends. Like, I think, you know, Cal she's leaning more into sports. So some of it might have to do with things like that. But I did also want to ask, you know, some of these markets are structured differently.

like you read about this one year blog posts, some of them use traditional limit order books. Some of them have a different structure. Can you talk about that and how that might kind of influence how a user might think about, you know, trading on these? I mean, from an end user perspective, I don't think it really matters, matters too much, right? So they're using, you know, the limit order books, as you said.

So it's really about, you know, being patient makers versus impays. takers. And it's really how, you know, the market makers would basically, you know, spread a bunch of orders and just, for example, just wait that the retail investor would just, you know, you know, hit the bid basically or lift the offer really and just, you know, just place the order and literally just pay the spread because sometimes the spread is wide, but there's not a lot of liquidity. This, again, it's very similar to crypto exchanges. So you need to have a lot of, you know, market makers, basically, so the liquidity is relatively tight. And I think that's, you know, from a user perspective, it doesn't really matter too much.

As long, again, as long as there is volume, that is really the key. Because otherwise, you cannot really execute. Otherwise, the spreads are just too wide. And, of course, every time, you know, you cross the spread, basically you lose money. And I think that's sort of like, you know, very key how, you know, how these prediction markets really need to, you know, work on this. But, you know, as we have seen that, you know, there has been some professionals. partnerships being being done with market makers. They're also, I think Kalti has their own Kalti trading team that are sort of like, you know,

a market maker in the background. Of course, there's affiliated with the exchange. And, you know, Polly Market is trying to build this as well because, again, volume is key. So it doesn't really matter too much from a user perspective. It's a limit order book. But that's so like the, you know, the standard, you know, as we have seen, but that's also of course what we have seen that the Robin Hoods, they're receiving a lot of money

with a payment for order flow on the stock market. So I think there are some similarities here and of course the volumes are still relatively low with a billion dollars a week but they might increase. And I think we have seen, for example, you know, token terminal has data, you know, on terms of the volumes where we can compare it, you know, if Kalshi is ahead or if Puli market is ahead

and maybe it has to do with the NFL season, you know, that it's just, you know, started where people are betting, betting more on those games versus poli market maybe, you know, on other factors because, again, the user base is more global and maybe they don't care too much about U.S. sports in the sense, right? That's how I would kind of like assume is probably the volume a little bit different. But I think the bottom line is really that they have raised $3 billion, which is a lot of money and they're really going for expansion, you know, in the U.S. So I think there's a lot more stuff happening than that. than next year. All right. So let's talk a little bit more about next year for a moment just because, you know, we've set the stage with these two main initial competitors, all these other new entrants. One of the events we didn't talk about, but is important that we should discuss, is that Polly Market will be launching a token Polly. Interestingly, they're going to do it be an irdrop, which is a mechanism that's not actually favored at the moment. But I'd be interested to hear, you know, how you think Polly Market can make that

AirDrop with success and use it to help them, you know, cement their dominance. Yeah, I mean, I think as we have seen in the past, I think air drops have become, you know, popular. Of course, some of them, you know, had great success or not. But I think here the interesting aspect is really that Polly Market is a crypto exchange, right? It's all really like on chain. And that's where, A, the data can be actually analytical. quite well, you know, the, the, the, the, the, the, the, the, the, the, the, the bats can be analyzed. We can see, you know, where the bets are being placed. But I think it's also,

like, a key factor, you know, was a key value proposition for us to kind of, like, write, you know, the report or write the reports around it, that, that theirdrop is coming. I think it has been confirmed by, you know, by the CEO, founder, has come, be concerned by, confirmed by the head of growth. So the adrop is coming. And I think, because everybody can simply, you know, open, open an account there. So you get a wallet, address. So the airdrop can be just, you know, easily, you know, find its way into your account. And I do think it could be quite successful because, you know, people are looking for air drops, right? That's one of the key strategies for, you know, for example, to invest the B&B

token because you would have made another 10% this year, just simply so air drops if you would have sold them the first day. So I think people are looking for these sort of free yield opportunities. And definitely from a crypto perspective, that's kind of, I think people would favor, you know, the Polly Market platform because if you trade there, you know, you actually, you qualify. And because the volumes are, I think, concentrated among a few large players. So even if you'd say you trade, you know, I think we looked at this and we read some, you know, other research around this, if you have traded like $50,000 worse on Polly Market, you would have been among the top 1% of the players.

So it's almost like, I would say, relatively easy, you know, at least. until now to be among, you know, the larger players and then qualify for this air drop. And I think, you know, it can be quite valuable because again, again, what you also said, the competition is really heating up. And I think you want to reward your users. And in the past, it has always been very favorable if you reward your users. You know, we have seen this, of course, with hyperliquid, where, you know, I think it started almost like exactly a year ago, you know, with the, you know, with a token launch there.

And I think then, I think, you know, volume started to increase and go in sync and that this can be here as well because everybody who holds the token will suddenly become, you know, always like, you know, a marketing person for the protocol. So that's why I think it's quite interesting and the value proposition. And I think it's going to come for sure. And I think it's going to come sooner than later. So I would assume it's probably going to come, you know, end of Q1 next year because I think they want to get a leg up. And again, they are already crypto-native, so it shouldn't really take too much. So that's why the time to get involved, the time to look at a few things is really now, we think. And do you think that we should expect that some of the other platforms will do the same, launch a token?

Well, I personally don't think so because, you know, it takes actually a lot to become really a crypto-native platform. And I think that's really their big advantage, right? So I mean, if Kulchi suddenly, you know, launches a token, but they're not really crypto-native, I think it would be a lot more, you know, difficult to kind of tie into, you know, what is really the advantages. Are there going to be, you know, buybacks? Are there going to be, you know, reductions on trading fees or anything versus, you know, on a crypto-native platform, I think it's a lot easier. And this is what we have seen, you know, in the past how, you know, tokens from exchanges, you know, have actually been used for, you know, rebates or they have been, you know, for other special

treatments, you know, for higher tier exposure. And I think in the past, you know, I think when you, you know, accept, of course, the FTT token, but if you look at in general, crypto exchange, tokens have done quite well, right. I mean, that's kind of like the interesting aspect here, you know, that I would also draw a parallel. I mean, when you look at, you know, I mean, you can name like endless tokens, really. But normally, to exchange tokens are doing well. So it's worthwhile having exposure to them. And of course, if you get them through an airdrop, you know, that's probably not a bad idea.

Okay. So I'm just drawing a blank. The only one that comes to the top of my mind is B&B. But what are some of the other successful ones? Well, I think when you look at, you know, BigGad has a token. I think that has also done, you know, quite well. I mean, OKX has a token. I think you can look at a lot of the crypto exchange tokens.

they somehow really have done, you know, outperformed especially and almost like surprisingly this year. You know, there's also, you know, an exchange in Europe, I think. It's called Whitebit, you know. I mean, I've never heard of it up until May this year. And then, you know, some of our flesh in our systems. And I think since May it is up like 100% versus the overall crypto market has like struggled. And I think the, again, the BitGit token has initially done, you know, quite well. this year as well. So it's interesting really that

even in the market where for example, altcoins have really struggled this year that some of the exchange tokens, despite the potentially lower volume that some of the alcoins are having, the exchange token have outperforms. And of course, you know, hyperliquid has done well from where it launched a year ago. Of course, it has given back some now. But I think in general, it gives some sort of like exposure to the equal. ecosystem. So, and I think that's why it makes sense. And, you know, as you said, BNB has done, of course, phenomenal well, you know, it's up, you know, a lot, of course. And users still generate,

you know, revenues to some of these air drops. And maybe that's also something where there can be like a permanent, you know, air drop to some of these token holders. So I think there can be, you know, smart tokenomics here being structured and really help, you know, establish themselves at least in the crypto space. Again, you know, a lot of the trading is in sports betting. so that's a different market, but nevertheless, I think it's a niche market that can be built out. All right. So in a moment, we're going to talk about how it is that Marcus trades production markets. But first, we're going to take a quick word from the sponsor who makes this show possible. Walrus is the home for data that you really value.

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allows you to build that that just doesn't currently exist today, either in the decentralized or centralized world. And they tend to be the use cases around people who think, let's say up time is very important. So where your business or your data is absolutely critical that it is available 24-7. because something like Waris is almost impossible for it to be taken down.

It's where provenance is very important, where I need to be able to prove that this data is the data that I say it is, and where security is extraordinarily important, and I can also guarantee that it can't be stolen and it can't be hacked. So they are the use cases that will be using Walrus, and in five years' time, I think what we will be seeing is in this world of prolific AI and AI models. The world will be storing their data and the outputs of those data on Walrus, and they will be training. trading it with other agents or other enterprises who want to access that. So what this gives you, it gives you the security, it gives you the provenance, it gives

you the reliability, and with Walrus, you also have the ability to actually monetize this. So this is, I got all this security, and now I can actually generate a revenue stream of it that was not available before. And I can guarantee to the person that's five, that this data is trustworthy. You wrote a great series of posts on how to trade prediction markets. But before we get into kind of like all these strategies and everything, just explain how the risks in trading in prediction markets differ from regular crypto trading. So of course, you know, in prediction markets, these are, you know, event contracts.

So there is a definitive end to it. It's similar to option and some of the, you know, the early days of the crypto futures where they had an expiration date. Of course, now everybody trace perpetual futures. But options, of course, have also like an end date versus, you know, let's say Alphcoins are sort of like an option, an open-ended option. Because as long as you hold it, you have the potential, you know, probability or chance really to make, you know, back your money or to really make an outsized return. Versus, you know, prediction market, there is a definitive. end date, you know, some of them are longer, some of them are shorter. And the interesting aspect is really that the way how their work is really a probability

based, so it's a barrier option. And you have to really understand what probability you sort of, you know, implying and where you're really buying it. I mean, they tend to work that you're buying a contract that is somewhere priced between, let's say, one cent and a hundred cents, so between one cent and one dollar. And if you're buying it at 60 cents, you basically, putting in a 60% probability that this event will happen

yes or no and most of them are structured as yes or no events really and I think that's how they really differ and so you need to get really the timing right so if you for example betting that Bitcoin would reach 100,000 by end of the year, the bet is of course

over on December 31st but if of course if you buy Bitcoin you can hold it open end and if suddenly Bitcoin only reaches 100,000 on January 1st, you still can make money with your Bitcoin trade, but not really with the trade on, you know, prediction market because it would have expired. So it's really that these contracts are sort of probability option contracts and not sort of, you know, taking, you know, a longer term view because also the probabilities can shift, right? We have seen this, of course,

you know, when when Trump suddenly was interviewing a new Fed share or, you know, this week, then the probability for, you know, for the highest probability candidate, you know, started to decline, so you need to be fast with the news there. I think it was the FT who came out with the comment that Trump was interviewing more people this week. And then the probability for Kevin Hesitt, I think, dropped from 80% to 70%. And I think it took a couple of minutes. But, of course, a professional trader, they would sit there, see the headline, maybe adjust their book reposition themselves.

and can take advantage of it versus if you're only casual trading on these markets, you might see it a day or two later or wonder why the P&L has changed. And that's, I think, how professional traders really have an edge because they're in the news flow, they're in the volume flow and the liquidity flow, and that really can make a difference. Okay, so let's talk about a specific post that you wrote called the Polymarket Bitcoin trade paying 63% annualized with near certain odds. Explain what that trade is and how how those numbers work, how it can be 63% annualized

with near certain odds. So 60% annualized, it's around 4% from now until end of the year. So at 4% seems for some crypto traders, you know, maybe just a very small return. But of course, the returns can add up. And if it's just over, you know, over let's say three weeks, it actually, you know, analyze quite well, especially if the capital can be moved around from, you know, from trade to trade. And I think the key thing really is to look for these, you know, for these certain certainty trades. And I think there's, you know, different strategies. We outlined, you know, 10 different strategies, you know, in our reports that people kind of could follow. But, you know, the one trade, you know, that you're referring to here is, you know, it's actually around the Bitcoin ETFs. So the question is,

can the Bitcoin ETFs eclipse the inflows from last year? So will the ETF flows in 2025 be larger than the ones in 2024? And when everybody looks, of course, at the daily ETF flows, but if you aggregate them, that last year ETFs attracted $33.6 billion U.S. dollars, and this year they attracted around $22 billion. So there is $11 billion difference. So what do you think is a probability that the Bitcoin ETFs will accumulate another $11 billion from now until year end, while they only have really accumulated $22 billion?

So mathematically, we can look at this, we can calculate the probability, you know, we can run Monte Carlo simulations, just like how we would, you know, structure, for example, like the option probability. and the probability is literally on, you know, on a simulation of 200,000, you know, pass forward is literally, you know, near zero. I mean, it's really like seven decimal points, you know, behind, you know, behind the dot here. So, but you can still pick up the 4%. So if you say, well, I don't think that the Bitcoin ETFs in 2025 will outpace those in in 2024 because it would require another $11 billion of inflows. we have, I think now we have 14, 15 trading days left only. We have the Christmas holidays.

We know that, for example, since October, the ETA flows have, you know, significantly slowed down. We have around year-to-date, around less than 100 million U.S. dollars of inflows in, you know, per ETF, you know, year-to-date, basically, on average. But we would need $700 million per day, which seems to be unlikely, which seem to be unlikely if, you know, if Powell would become, you know, more hawkish during the Fed meeting as everybody sort of like was expecting. That prevents, of course, institutional investors from investing. So long story short, it's really the probability was, you know, was really near zero. Mathematically, it's impossible.

But you can still pick up the 4% by fading this trade. And I think there's a lot of those traits that we have looked at that seem, you know, mathematically impossible. And but there still can be, you know, some yield to be picked up. And that's kind of like how we approach the markets. Okay. So the next blog post that you wrote outlined a whole bunch of different strategies you used to make money on prediction markets without necessarily even having to have an opinion on the actual market or like knowledge of the event, which I thought was super interesting. So let's just talk through all of them.

So let's see. The first one is one that you called cross-market arbitrage. explain what that means and how you use it. So if, of course, the probabilities on Kalshi versus on Puli market are different, you know, for example, in our U.S. election contracts, you know, I think on the midterm elections, there will also probably be some bets placed. There's some bets placed on, you know, Fed, you know, who's the next Fed chairman. And of course, you know, those probabilities can adjust on one exchange, you know, quicker than on the

other. It depends on the professional market makers, you know, on the players. It's a little bit more systematic and I think needs to have really fast in terms of like trading capabilities and capital because they're not working as crypto exchanges where you can simply send stable coins to one. But that's one strategy. If the odds are very different on one, you potentially can hedge them out on another. And these are like very low role risk. I think when you go through the numbers, it's really we rank them. What is really the lowest risk to the highest risk?

And I think we want to be in the lowest risk factors because that has actually historically proven to make more guaranteed money in the sense or with the highest probability because those sole moonshots trades, their rarely tend to work out. And I think the smarter traders, the market makers, they tend to be in the higher probability trades. And that's kind of like how we approach the markets. And then the way that works is are you, since you don't actually know which way it will work? Are you just betting the same amount of money in both markets or something? And then whichever one wins, you just end up earning the difference between the winning bet and the losing bet. Yes, correct. But of course, the culture, you have to factor in some trading costs that you might not have on pulley markets.

So there are some small differences between the platforms and they don't make it that easy. I think it's in one of the earlier days of crypto where it was also not so easy to arbitrage one market another. but arbitrage opportunities certainly exist. And especially, for example, we saw this in last year's election, really, because you have also up until now, sort of like different people may be trading on those platforms, which might now converge with Polly Market entering the U.S. market. And I'm sorry, when you said that the platforms don't make it easy,

are you like saying that they're intentionally trying to not make it easy? No, no. Okay. No, I was just saying because with Polly Market, you can, you know, transfer crypto and it goes like super fast and is immediately in your account versus on Kaltchi, you need to, you know, transfer, you know, capital and you have to have the capital there to take the bet. So it's not, you can, you know, it's not how the modern day exchange arbitrage on the crypto side works where you can immediately send USDC or USDT around.

Right. Okay. All right. So the next one you called endgame sweep or late stage arbitrage. What is that and how does that one work? So, of course, you know, one of the, you know, it's very similar as like the probability or the time decay capture really here. I think you can almost, you know, put them in a similar bucket here. But the endgame sweep is what I would just, you know, argued about the, you know, Bitcoin ETFs. You know, we are very close now to the end. Some of those probabilities are literally, you know, a day or even like hours before, where somehow the spread has not closed, but actually the outside.

outcome is pretty much determined, right? I mean, it's very difficult for now. I would argue that the Bitcoin ETF suddenly see, you know, $11 billion of inflows if they have only really seen 22 billion year to date. And I think that's one of these sort of like endgame sweeps where the mathematically it's impossible. And therefore, we want to take the bet because, you know, we can make 4%. And 4% again, annualize looks like a pretty decent return. Right. Yeah. I mean, the way that I was reading a lot of these, is like if you just keep doing it enough, you know, it's almost like a day trader type mentality. Like, you know, the more you do it, just the, your earnings accrue.

And so, yeah, so then you also talked about time decay capture. So you are saying that those two buckets are the same time day decay capture. There are a little bit similar. I think, you know, usually the time decay is. is more kind of like, you know, if volatility is still, you know, priced, priced too high, you know, that's what we're sometimes seeing, you know, another trade is, you know, I mean, do you think, for example, that Bitcoin will outperform gold this year? And, you know, here, of course, you know, Bitcoin is almost like, you know,

is around flat for the year. Gold is up 60%. We have three weeks waiting. I mean, you're smiling, but again, there's another 4% to be picked up here. you know, if you bet that Bitcoin will not outperform gold this year. And I think that's kind of like really, you know, the time capture decay here as a strategy that we're looking at. And, you know, and again, volatility of those trades is price just too high because we look at it from an option pricing perspective.

Okay. So there's another strategy called maker spread harvesting. Explain what that is and how you use that one. So mega spread harvesting is of course, you know, more for professional traders is really more when the market is really volatile. And, you know, somebody just places, you know, a market order, you know, buy at market versus not a limit order and the market just moves. And I think we have, you know, seen this how, for example, retail traders just, you know, buy here versus the spread has moved because it's, you know, volatile. And that can be like arbitrage. I think it's more really for professional, you know, with the right trading engines.

but that's something, a strategy, of course, you know, we know from crypto exchanges, we know from market makers on tradfai institutions, but that is possible when volatility is high and liquidity is thin relative to, you know, the volumes that are going through. In a moment, we're going to dive more into Marcus's tips for how to trade prediction markets, but first a quick word from the sponsors to make this show possible. I think there's still quite a lot of skepticism. around the performance of decentralized storage, that you can't have both the security of the decentralization and the speed.

This is actually why we built Walrus at Mistin and Sween. We needed data storage, and there was sort of nothing that existed for a modern performance blockchain. So we built our own, and then we realized. other people probably needed this as well. So I would say that. And then, and speed and ease. I think at Mistin, it's a whole organization created by engineers. They hate doing anything twice.

They hate anything that isn't easy. So they built a system that they wanted to use and they found very easy to use. So I think when people come to war us, they will find it. Easy to use. Fast. With all the benefits of decentralization. Sort of seems dependent on the news moving in some way that makes people a little bit more emotional or something. So is it something where you would kind of need to predict in advance that?

that might happen and then have some limit orders ready just in case? Or like, how do you prepare for that? So market makers in general have like, you know, limit orders in the market. And of course, you know, trading systems can move market, can move those orders out of the market when prices move, right? So we see this, of course, a lot with, you know, for example, on the crypto side, with, you know, with liquidation stops above a certain level. But then the price moves close.

to do this level and then suddenly these orders disappear. And professional traders, you know, can do this as well. And then, of course, it's a matter really, you know, how the trading engine is really set up. But I think the interesting aspect is really you're trading, you know, some of these, you know, resting orders that maybe some people have in the market versus the, you know, the buy-at market order. So it's really limit versus, you know, get executed now, really.

And I think that's a little bit where, you know, some people maybe they put also, you know, a limit buy order at a much lower price and then are not, you know, not on their computer or not on their phone. And then suddenly the market moves and they're getting hit, for example, right? And I think these are all kind of like these strategies we know from professional traders. But I think it's not one of the core strategies. There are a few other core strategies where, you know, that everybody actually can execute versus this one is certainly more for the sophisticated traders. Okay. So there's another one called probability compression play. Explain what that one is. So of course, you know, I think the best example around that was, of course, after, you know, the October F-WMC meeting, you know, the probability that basically the December rate cut would occur, you know, fell dramatically, you know, because, you know, I guess Powell wanted to keep the odds more or less, balance and then we move from near certainty, I think we move from something like 80 to 90% that December would be a cut to just down to 30% until, you know, New York Fed Williams came out and, you know, said that way a cut would still be, you know, the base case scenario and then we move from, you know, 30% to again to 80%. So the probabilities have like, you know, massively changed, you know, over time really. And I think that's also some strategy where we can see that

You know, it requires, of course, a little bit, I would say, you know, taking a view. It's not a riskless trade. But if the probability is just like 30%, and we believe that the Fed wants to go at least with a 50-50 market pricing into the decision, I think that makes sense to sort of like, you know, buy this probability. You know, or another aspect might be that, you know, I think everybody sort of like knows that Trump likes to keep his, you know, decisions until really the last moment. So betting on a fat chair maybe now is too early. And of course, Kevin hasn't had like, you know, 80% or higher really priced in. And that was sort of like a way also sort of like faded. Now it drops to like 70%.

But it's sometimes, you know, playing around those levels where the time decay is still very long. But the, you know, the bet, which is, again, the probability is not really reflecting this pricing yet. And I think we have seen this, you know, maybe around the fat share. we have scenes around, you know, U.S. FOMC meeting. And that's kind of like how we look at it. Okay. So you briefly touched on this earlier, but explain a little bit more about why it is that you avoid what you call long shots

and explain what those are. So apparently, you know, when a low probability bet, which is basically a contract that is below 10 cents, which is only like a 10% probability, you know, of occurring, So apparently 60% of all the money that is lost is really lost with these, you know, with these long shot bets basically where you take really, you know, if I win this, I can make, you know, 20 times my money. Like if it's a 5% probability, it would pay out, of course, you know, 100, right?

So you're investing, you know, 5 cents, but you can make a dollar. And, you know, it sounds great. It's sort of like the lottery ticket, you know, mentality, how some people approach it. And I think there has been, you know, various studies that if you analyze lottery playing by zip codes in the U.S., which, of course, have to do with, you know, with income levels, you can analyze, you know, who is playing, when people are playing, you know, what are the, you know, approaches. And I think it's a little bit similar with these low probability betting contracts. They have a very low chance. I think, you know, I think sometimes it's, you know, you cannot help yourself, but you want to take a bet because the outside.

a return seems to be, you know, quite large. You know, for example, betting now on a fat chair that is not one of the, you know, the top candidate basically can actually lead to an outsized return, but it can also mean that actually the probability just reprises. So you might not need to hold it until the end, but, you know, a lot can happen between now and something is announced. And I think that's something, you know, to look at. And again, I think 60% of all the money that is really lost by the people who lose our

with these low probability you know, trades basically, which is very similar, again, like with lottery tickets, right? Lottery, you know, one person wins, but, you know, so many, you know, thousands and millions are losing,

even if it's small amount of money, because they look at it as, you know, it's fun, it's gambling, but that's, I think, not how the professional traders seem to trade. They really seem to focus more on the higher probability trades, that really going from, you know, high probability to guarantee probability.

And that's where I think the money is. that's how people can pick up the money. Yeah, it's like that strategy is more like a lot of small wins, but they're more guaranteed is not the right word, but more likely, basically, more probable. Okay, well, so this actually gets to the next strategies, which I actually found kind of interesting because the way I look at it is, yeah, it's basically almost like copy trading.

So one of them, you called liquidity imbalance trading or follow whale flow. So explain what that is and even how somebody would do that. So of course, you know, the venues, of course, they're trying to say, you know, we providing the wisdom of the crowds really, you know, a way to really crowdsource the information. But it's not the wisdom of the crowd. It's the wisdom within the crowd. because within the crowd there will be some large players

they have probably outsized information they can trade larger size and if they're really confident of an outcome they can place a big order basically and yes it's a little bit like copy trading but you need to find the people that are really good and I think they are the way to find this out we have seen this of course in crypto as well

where some of the smarter wallets being followed by various services and I think this can be done here as well, right? I mean, who has a good track record, who is winning, who might have an edge in a certain category, be it, for example, you know, maybe is a very good end, you know, with sports betting or can move the money around, you know, in one category.

And I think following those people, you know, makes sense and it can be a strategy because if they place the bet, yes, it skews a little bit the odds, but it can still generate some interesting returns because you want to follow the smart money, right? It's just not copying somebody where it's just like a, you know, like a one-day winner, but it's more kind of like, okay, who seems to be consistently betting larger sizes and seems to be winning in one-three-categories who seems to have an hatch sale.

And so I don't know how it differs on the different platforms, but is it easy to figure out who those accounts are? Like I would imagine maybe on Polly Market it's easier because it's more crypto or no? Exactly. Exactly. And so on Kalshi, is it possible or not possible? I don't think it's possible, but I think in Puli Market, it's possible. So in Polly Market, it can be done.

Okay. Yeah, that makes sense. So then the next one is price sensitivity screening. Explain what that is and also how you're exploiting that one. So, you know, one aspect is, of course, again, you know, the it's really the one-touch barrier options that we need to really look at, let's say, any Bitcoin trade. So, for example, will Bitcoin hit 100,000 by December this year?

Or, you know, another trade is, will Ethereum hit $5,000 by end of the year? And of course, you know, both. But if you just focus on Bitcoin to make it simple, of course, we have the one-tenth, barrier option and they're priced in a very different volatility, implied volatility, than normal options we see on Deribit or on iBit. So we can compare, you know, the option surfaces, we can compare the probability. What is the probability that, for example, Deribit options price that Bitcoin will hit $100,000, you know, by, you know, their contract expires by December 2026, I think.

and then we can compare it, of course, to iBit, you know, when they expire. And, you know, we have around, you know, of course, a much higher volatility because it's just like one touch, right? So, you know, if Bitcoin hits 100,000, this, you know, from now until end of the end of the months, it can happen at any time versus, you know, the other options on Deribit, for example, or an iBit, it really depends on, you know, at the end of really the, you know, the option expiry. So, but we can understand and we can see if there is a volatility spread to be harvested. And of course, the argument is that on Polly market or on these prediction markets, it's more likely that retail investors are trading on these exchanges. It's a little bit more difficult to exchange, you know, some of your Greeks, your, you know, your Vega, your theta exposure and all these things.

But nevertheless, we can calculate a probability and we come actually to a much higher price probability. for example, when we sent out the idea, there was a 60% probability priced in on on Polly market that Bitcoin would hit 100,000. And yes, maybe this is because retail investors are more enthusiastic. You know, people love the 100,000. People think, you know, the Fed is going to cut. Of course, Bitcoin is going to rally in December versus on other exchanges of probability was just, let's say, around, you know, 10, 15%. And then adjusting, of course, because it's a, you know, one-touch barrier, so the volatility is naturally twice or three times as much.

So we're getting to a volatility in the, you know, I would say institutional market, let's say on Deribit, you know, of around like 30% vol versus 60% vol on the polymarket. And of course, it means you're selling, you know, the one on Polymarket and maybe you're buying the one on Deribut. So this is kind of the probability compression here, really, where you're arbitraging one market against another. and I think that's kind of like a strategy we put forward and, you know, so far it seems to work out.

Huh. Okay. All right. So the last couple are like maybe a little bit similar. One you're calling conditional hedging. Explain, you know, what that is and how you capitalize on those situations. Yeah. It's just, you know, just like a macro event risk. You know, I think that's kind of the initial I think the initial argument, how Kalti got the CFTC ruling in 2024, really arguing that, well, some people want to hedge some real world outcomes, so it's about event contracts, you know, enabling hedging really. And, you know, of course, of course, price discovery as well, but it was really about these, you know, real life economic outcomes.

You know, if, for example, I don't know, all price would be below something, below $60. It's maybe more difficult to do in the futures market where it has traditionally been done because it's not a definitive outcome and it needs to be rolled. There's always be some delivery risk versus on prediction market

it would be a yes or no. And I think that's sort of like how insurance contracts are sometimes structured. And I think here is a little bit similar. Okay. So the last one again is I think, you know, somewhat similar to what you just described. You call it event calendar positioning.

Explain what that one is. Yeah, Fed meeting, of course, anything around those. But it's also, you know, expecting an event like, you know, political events. And I think that's like the little difference. You know, because of conditional, it's really almost like where you have an economic interest in the event versus the event calendar is really your best. betting on an election or you're betting on, you know, a fat outcome. I think you can go and, you know, differentiate themselves a little bit more on the technicalities, you know, because there can be some arbitrage involved between different instruments,

but I think I don't want to make it too complicated. I think most of the money, again, is on the sport betting, but I think on this strategy that you just outlined, I think most of the money seems to be really in the endgame sweep, in the time decay capture. because that's where the bigger money is being played and not necessarily on, you know, on these, you know, moonshots or, you know, other really lottery ticket style, style trades. Okay. Well, I appreciate that you walked us through all that. I mean, I honestly found that blog post really fascinating because it just shows kind of how analytical you can get. You know, I think a lot of people when they just look at this, they're like, oh, you know, you're trying to figure out what's going to happen in the future or whatever. But no, it's like you don't necessarily have to have any information about the event.

You just have to have the ability to reason about the likelihood of various outcomes and then look at like whether the pricing makes sense for that event. And then, you know, it's not like you need information about whatever this topic is. So, yeah, I just found it really interesting. Well, is there anything that I didn't ask you about prediction markets that you feel would be useful for the listener to know? I think we covered, you know, already, I think a lot. I think we covered, you know, the strategy, I think where people, you know, should focus

on. I think the key is really, you know, are you approaching those prediction markets more from an entertainment perspective? But then, you know, just like with any entertainment venue, you're paying an entry price and, you know, you shouldn't complain if, you know, you have like less money in your pocket at the end of the day, really. But I think the aspect is really there is more and more. professional traders looking at these markets and really pricing it from a probabilistic viewpoint.

And I think that's really kind of really the takeaway. And that's when we wanted to explain to our subscribers. That is a probability event. There's a way to make, you know, the money on the, you know, not on a 100% guaranteed side, but on a, you know, higher probability side. And I think that's kind of like interesting because everybody, of course, quotes all these predictions. but again, you know, it's really, the aspect is in the wisdom within the crowd and not necessarily the wisdom, you know, off the crowd. And it's really finding your right niche. But it's definitely going to be a growing theme going into 2026. And I think the airdrop could be quite interesting where, you know, the more the activity is going to, you know, you know, starts to increase. I think the more, you know, they're becoming part of what we're doing. That's why we're also seeing, of course, all the

you know, from the Robin Hood's being, you know, getting involved and everybody tries to get some of the pie here. So something is definitely happening and we wanted to be ahead of this. And that's why we look at some trades and, you know, explain some, you know, how to really make money on these exchanges or not or prediction markets. All right. Well, Marcus, it's been such a pleasure chatting with you. Thanks so much for coming on Unchained. Thanks for having me.