Polymarket and Kalshi: Which platform will eventually emerge?

By Payment 201

 

In this issue of Unchained, the founder of 10x Research, Markus, deciphered the core of the projected market competition. He also discussed:Will there be more platforms to launch their own tokens like Polymark? He also detailed an almost certain trading opportunity hidden in Polymucket and shared it10 strategies to be involved in predicting market transactions without having an opinion on the event itselfI don't know. One of the key insights is: “The true value is not the wisdom of the masses, but the wisdom of the masses.”

Takeaways:

1. The nature of the forecast isProbability pricing marketThe structure is closer to a touchdown barrier option than a non-traditional gamble。

2. Every forecast market transactionClear due date and certainty winis different from a secure asset that can be held permanently。

3. Market projections are still early, but the volume of transactions and the size of users are fast approaching mainstream financial platforms。

4. The true moat is not a product function, it isConcentration effect of liquidity and volume of transactionsI don't know。

5. Professional traders do not “predict the results”, but rather seek outStructural pricing errorI don't know。

6. The most stable returns are fromIt's near but not yet fully probableThe incident contract。

7. Low-probability “monthly” transactions contribute to most losses and should be systematically avoided。

8. Final end-of-life and time-depletion capture are the strategic sources for predicting the highest value for money in the market。

9. It's a really valuable signal from the marketA few high-quality participants in the crowdThis is not a popular opinion。

10. The forecast market is betting from entertainment to entertainmentProfessional Probability Transaction and Risk Management ToolI don't know。

 

Laura Shin:

Hello everyone, welcome to Unchained, a non-fiction programme focused on the real situation in the encryption industry. I am Laura Shin, the host, and thank you for joining us on this live broadcast. Before proceeding, make a quick reminder that anything you hear in Unchained does not constitute an investment proposal. This programme is intended for information and entertainment purposes only, and I and my guests may hold assets discussed in the programme. For more information, please visit unchainedcrypto.com。

Laura Shin:

Today's guest is CEO Markus Thielen of 10x Research. Welcome, Markus。

Markus Thielen:

Hi, Laura, thanks for the invitation。

Laura Shin:

I look forward to talking to you about this. Now, predicting the market is really hot. The two biggest players, Polymucket and Kalshi, are highly valued and competitive, and I think most people on X should feel that。

And as Polymarket begins to enter the United States market, this competition will only escalate further. At the same time, Gemini, Robinhood and other platforms have also begun to enter the field. At the same time, the track faces some regulatory resistance. Nevertheless, none of this has prevented the forecast of a sustained increase in the volume of market transactions, which is rising almost every month. November is close to $2 billion, at least for Polymarket and Kalshi。

what do you think of the stage at which the market is projected? which position do you think they are on the profile

Markus Thielen:

Yeah, sure. A very interesting point in this is that, in fact, the volume of transactions has actually come up and is now essentially at a relatively stable high level. I think it's probably for nowNearly $1 billion a weekThis level is quite high. And it's a bit like this: when bitcoin fell from about $100,000 to around $25,000, it was at that stage that the volume and dynamism of the market were projected to begin to rise significantly. The number of users per week is actually around70.000 have grown to nearly 250,000I don't know. These numbers are actually very large, suggesting that many people are involved。

Of course, it also has to do with the fact that Kalshi and Polymarket have been co-financing around the past few weeks$3 billionI don't know. This means that they have a very strong market extension capacity。

I think when we look at 2026, we see a lot of things going on. I think more investors and traders will start using these platforms to hedge some economic risks, macro-risks and, of course, speculation。

But for now, about..Ninety percent of the deal still comes from sports gamesI don't know. On the side of the encrypted forecast market, it remains a relatively small subdivision, but nevertheless it is growing。

From a variety of perspectives, the market is very interesting. So if I were to judge, I'd say predict the marketStill at a very early stageI don't know. Because these platforms were virtually non-existent one year ago, the volume of transactions really began to grow significantly, and it was the first real big push after the Trump elections。

If we look at the liveliness of last month, for example, how many users have visited these platforms, as a comparison: about4 million usersVisit Robinwood, around30 million to 32 million usersVisit Coinbase, andPolymarket close to 20 millionI don't know。

Thus, at the user level, these forecast markets are becoming increasingly attractive and are beginning to attract large volumes of transactions in different types of events. I think we're at a starting point, and when we enter 2026, a lot of things are going to accelerate. As you mentioned earlier, Gemini has just obtained the relevant license plates for the forecast market. So competition is on the rise, and many people want to get into the field and get a piece of it。

Laura Shin:

I'd like to ask you about a connection you just mentioned。You said that when bitcoin prices began to fall, the market was projected to start to rise. Are you suggesting that some of the people who were trading bitcoins are now moving to the trading forecast market? How do you judge that

Markus Thielen:

I think it's more like a coincidence. If suddenly a large number of people abandon the encrypted exchange and go to predict market transactions, I think this is a little far-fetched。

This is one of the issues that we are trying to study and figure out, but that is not the case for the moment. For example, when we ask our subscribers, there are not many people who are actually involved in predicting market transactions. A lot of people are interested in it, but the real deal isn't that big. Many contracts, many bets, are actually smaller in scale, and they are not as liquid as we used to see in the encryption market. In the encryption market, you often see..$100 billion, $200 billion, or even $30 billionThe volume of transactions is forecasted to remain a very small market. Nevertheless, I think there are some interesting opportunities。

And from another perspective, it is also a continuation of the “playing” of financial markets. People want to be attracted to recreational financial products, only if you participate in the market from an entertainment perspective or from a probabilistic point of view. But anyway, the market is expanding and it has become a new instrument。

If we look at history as to how people used to arbitrate between different prices and products, it's really similar to what we're looking at now to predict markets: whether there are someStructural arbitrage opportunitiesWhat

Laura Shin:

Sounds like you're trading both encrypted and forecasted markets. How do you describe the differences between these two markets at the transaction level

Markus Thielen:

Sure. Many people don't really realize that one of the things that happens to them isPredicting markets is essentially an alien optionI don't know. It's essentially about..ProbabilityIt is an understanding of probabilities and a great reliance on the speed of reaction to news. These are..Contracts for definitive resultsI don't know. Essentially, yes or no, there is no intermediate state. It must be one win and the other lose. In an encrypted exchange, for example, dealing in an asset, the situation is completely different. As long as you hold this asset and the price rises, all the holders can make money. So this is a completely different narrative structure。

I would say that predicting markets and encryption markets are very different in structure. But they also have some similarities, especially in the case ofA mature traderSay it. In more “hard” options, predicting markets is very much likeone-touch barrier optionsI don't know. You need to understand how these contracts are priced and the factors influencing probability. And in the encrypted market, people buy a narrative, a theme, a story. I think that is the greatest difference between the two。

However, for mature traders, whether in predicting or encrypting markets, their thinking is very similar. Of course, as you all know, many encryption exchanges have their own internal trading teams, fund management teams or liquidity providers. These teams may be self-employed by the exchange or related parties。

In the past two to three years, much has been revealed about how these exchanges were “engineered” to become mobile at an early stage. Retail users cannot be directly associated with retail users without liquidity. Without mobility, there are no transactions; without transactions, there are no users. We've seen this in the early Bitmex. As I recall, Arthur Hayes, in a demonstration in Hong Kong in 2015, said that there were a large number of Korean bulkys trading highly leveraged futures, with implied volatility and very high financial rates, and that he had hoped to attract institutional traders to arbitrate on the other side。

A similar situation exists in the forecast market. A lot of people may not know that Polymarket and Kalshi have very mature professional trading teams. Some of them are owned by the Platform and others are intended to be established. These teams are..24 hours a dayAnd very professional。

the similarity here is that there are many unique contracts and unique labels in the forecast market, but you still need to be a marketer willing to stand up to the other side, otherwise you will not be able to attract traffic. so the structure here is still: patient marketers, vs. patient singlesI don't know. This is very similar to the encryption market. But the overall structure is still different. However, such structural similarities do allow mature traders to find arbitrage opportunities between different platforms。

Laura Shin:

Let's talk about the two biggest players. We mentioned earlier that there are other platforms that are entering, but focus first on the main competitors today, namely Polymarket and Kalshi. Soon they will compete positively in the United States market. Polymarket's application is now on line in the United States and is a beta phase。Polymarket financed $2 billion and valued $12 billion; Kalshi financed $1 billion and valued $11 billion. How do you evaluate the respective strengths and weaknesses of the two companies

Markus Thielen:

The key differences are:Polymarket is an encrypted primary platformI don't know。

it's on-ramp very fast and the opening process is extremely simple. for non-u.s. users, i've been given a screenshot, and they're ranked 240 on the waiting list, and the demand is very strong. if you're not an american user, it'll take almost two minutes to open the account, and you can cash it directly in encrypted currency. this process is the same as many early encryption exchanges: you just need a mailbox, you get the authentication code, and then the account opens. then you'll have a wallet address, a different encrypted or stable currency, and then you'll bet. the whole process took less than two minutes. and if you are a regulated platform in the united states, the process will be much slower because there is a long backlog. that's one of the differences。

Another difference is liquidity. From an institutional point of view, most of the bets are still concentrated in the field of sports games, which account for about 90 per cent. Others, such as event-type contracts, encryption-related forecasts, remain small。

Of course, the situation will be different during the election period. For example, during the U.S. general election, about$3.7 billionFunding is involved. The products of the two platforms are highly overlapping in sports games and political events. Future differences will be less and less. I think eventually they willWhenever there's a deal, it's a dealI don't know。

In addition, users can launch new bets on their own, and once the proposal is adopted, you can bet on both platforms at the same time, and even arbitrate if the odds differ. Currently, they differ in style and regulation, but eventually converge, especially as the United States market is the largest。

Laura Shin:

Let's talk about these new competitors。Gemini launched Gemini Titan, Robinhood and Susquehanna, for example. A few months ago, Limitless had a controversial token issue. Of course there are other players. What do you think of these new entrants? What do you think could be a really competitive opponent

Markus Thielen:

My personal view is that what really matters is these two big platforms. They dominate almost all transactions. It's not like we're going to have to do thisEverything in this market depends on..Liquidity and volume of transactionsAnd if you can attract the volume very quickly。We have seen it many times in the area of encryption exchanges: the volume of transactions is the key. Unless there is a major regulatory event, such as the one that has hit a number of exchanges in the last few years, from Mt. Gox to BitMEX, markets tend to concentrate in the places with the largest trade volumes. You can see how Binance grew up. It is because of its volume that it attracts more users and ultimately establishes its own leadership. If other platforms want a piece, they must have a very smart strategy to attract trade volumes。

Here, too, the situation is similar. If you're a smaller predictive market platform, you need the same volume. And to get the volume, you need some professional traders。

You just mentioned Susquehanna, they're very active in professional marketing. I think they are working with a number of platforms, and that is their role as market agents. So the key questions remain:How do you "engineered" trade volumesWhat? This has been a challenge for encrypted transactions, which will not be any different to predict markets。

Laura Shin:

So who do you think is leading the deal among these competitors today

Markus Thielen:

It depends, of course, on a specific contract, but overall, Polymarket is still slightly ahead. If you look at last month's access data, Kalshi has about5 millionMonthly access to users, and Polymarket about19 millionI don't know. This has to do with Kalshi's preference for American users, and Polymarket is a global platform where the opening process is simpler. In addition, Polymarket has become more exposed in encryption meetings and events over the past one to two years, which is one of the reasons why it is leading。

However, in terms of valuation, the two were very close. Kalshi may have a better income model because it charges relatively higher transaction costs, while Polymark is currently relatively low. But because Polymarket is an encrypted exchange that does not have to bear too much of the traditional regulatory costs or the early focus on the United States market, compliance pressure is relatively low. However, the situation is now changing as they enter the United States market。

So I think some of the differences between them will eventually recede. The final question is: who can attract more users and who can build partnerships with larger market playersI don't know. Because everything goes back to liquidity: there's no liquidity, there's no dispersed households, there's no institutions, there's no markets. This logic has been tested repeatedly in the encrypted exchange and in the forecast market。

Laura Shin:

This may also be related to the recent debate on Twitter. I saw some graphs on The Block showing that in recent months, especially the last two months, Kalshi seems to have traded more than Polymarket. But I'm not sure how these data are measured, because there are some variations in how they are calculated. I won't expand the details. But what I want to ask isThere are also some differences in the market structure of different platforms. You wrote about it in your blog. Some use traditional price-restricted order books and some have different structures. Can you describe these differences and how they affect the way users deal

Markus Thielen:

From the point of view of the end users, I do not think that there is a big difference. They're basically using price-restricted order book structuresa patient marketer, vs. a patient waiterI don't know. The Municipal Chamber of Commerce placed a large number of orders in the market, waiting for the bulk to come to their purchase or sell. When market liquidity is insufficient, the price gap becomes large. It's very similar to the encryption exchange。

Thus, from a user ' s point of view, as long as there is a sufficient volume of transactions, the structure itself does not matter. The point is still:Without the volume of the transaction, the difference will be too high and the transaction costs very highI don't know。Every time you cross the trade price differential, you're actually losing money. This is also why it is important for market platforms to focus on liquidity。

As we have seen, a number of platforms have begun to establish cooperative relationships with professional business owners. I also think that Kalshi has his own internal trading team, working as a marketer backstage. Polymarket is also trying to build a similar system. Because once again, the volume of transactions is the key. From a user ' s point of view, it is not important whether it is a price-limited order book, as long as it is sufficiently liquid. And, of course, there are some similarities in the pattern of Robinhod's income through payment for order low in the stock market。

The market is currently projected to be about $1 billion a week in volume, still modest, but it can grow. We can also compare changes in transactions between Kalshi and Polymarket through data tools like Token Terminal. It is possible that the recent increase in kalshi’s trade volume is related to the start of the NFL season, because they are stronger in sports games, while Polymarket’s users are more global and may be less interested in American sports。

But in the final analysis, the two have already raised $3 billion, a huge amount of money that they are preparing for the expansion of the United States market. I think a lot will happen in the coming year。

Laura Shin:

Okay, so let's put our perspective a little bit next year. We have prepared the stage, and now there are two major competitors and many new entrants. There's one thing we haven't talked about before, but I think it's very important:Polymarket will issue its own token, POLYI don't know. Interestingly, they chose to do it through airdrops, which are not really the most popular at the moment. I'd like to hear your opinion: how do you think Polymarket should make this drop work and use it to consolidate his lead

Markus Thielen:

Yes, I believe that airdrops have indeed become very widespread from past experience. Of course, some airdrops were very successful, while others were less successful. But here's a very interesting point:Polymarket itself is a encrypted original platformeverything is on-chain. therefore, these data can be well analysed. for example, betting can be analysed, and we can see how funds flow。

THAT IS ALSO AN IMPORTANT REASON WHY WE ARE PREPARING THE RELEVANT STUDY — THE IMMINENT ARRIVAL OF AIRDROPS. THIS INFORMATION HAS BEEN CONFIRMED BY THE CEO FOUNDERS AND BY THE GROWTH MANAGER. AIRDROPS WILL HAPPEN. AND SINCE IT IS VERY EASY FOR ANYONE TO OPEN AN ACCOUNT, YOU WILL HAVE A WALLET ADDRESS, SO AIRDROPS CAN BE DISTRIBUTED TO YOUR ACCOUNT VERY SMOOTHLY AND DIRECTLY. I DO BELIEVE THAT THIS AIR DROP COULD BE VERY SUCCESSFUL. BECAUSE PEOPLE ARE LOOKING FOR AIRDROPS, IT'S A FACT。

AND THAT'S WHY, FOR EXAMPLE, INVESTING IN BNB COINS IS A STRATEGY IN ITSELF, BECAUSE IF YOU SELL IT ON THE FIRST DAY OF THE AIR DROP, YOU CAN MAKE ABOUT 10 PERCENT MORE THIS YEAR. SO I THINK PEOPLE ARE ACTIVELY LOOKING FOR SUCH “FREE RETURNS”。

And that's why people prefer Polymarket, from an encryption perspective. Because if you trade there, you'll automatically have a space investment. Moreover, trade volumes are actually concentrated on a few large players. We've studied, we've seen, and we've seen, a few other studies: if you have a cumulative turnover on Polymarket$50,000You're already inTop 1% UsersI don't know。

So from this point of view, at least at this stage, it is not difficult to become a “large household” and thus easy to obtain empty investment spaces. I think the potential value of this air drop could be considerable. Because competition is clearly warming, and you want to reward your core users. In historyRewarding users is usually a very effective strategyI don't know。

We've seen similar situations on Hyperliquid. About a year ago, it issued tokens, and since then the volume of transactions began to rise simultaneously. Similar things can happen here. Because any person holding a token becomes, to some extent, a “marketer” for the agreement。

So I think this airdrop is very interesting and its value logic is valid. I am sure it will happen, and sooner than many would have imagined. If I had to guess, I'd think it might have beenEND OF FIRST QUARTER OF NEXT YEAR (Q1)Come on. Because I think Polymarket wants a pre-emptive advantage in competition. And because it's encrypted, it doesn't take much time to prepare. That is why we believe that this is the best time to engage and observe these opportunities。

Laura Shin:

Do you think we should expect other platforms to do the same and issue their own tokens

Markus Thielen:

I personally don't think so. Because it's really hard to be a encrypted original platform. And that's the great advantage of Polymark. If Kalshi suddenly issues a token, but it is not a encrypted original platform, it will be very difficult to define what the token is for. For example: Will there be a buyback? Will there be a discount on transaction costs? Are there other incentives? In contrast, these things are much easier in a encrypted primitive platform。

WE HAVE SEEN MANY CASES IN THE PAST OF ENCRYPTED EXCHANGES ISSUING TOKENS TO PROVIDE FOR THE RETURN OF FEES, SPECIAL CLASS INTERESTS, ETC. OF COURSE, IF YOU RULE OUT FTT FOR THIS FAILURE, IN GENERALEncrypted exchange tokens actually perform very wellI don't know. That's why I'd like to make an analogy. If you look at history, you'll find that a lot of exchange coins perform fairly well. So it is not a bad thing in itself to get these tokens by air。

Laura Shin:

I CAN'T REMEMBER AT ONCE. THE FIRST THING I THINK ABOUT IS BNB. WHAT OTHER SUCCESSFUL EXCHANGE COINS

Markus Thielen:

You can see Bitget, it has its own token, and it's doing quite well. OKX also has tokens. In fact, you can list a lot of encrypted exchange tokens. Their performance this year was even somewhat better than expected。

For example, there's an exchange in Europe called WhiteBIT. I haven't heard of it much until May this year, but its tokens have risen since May100%And the entire encryption market did not really perform well during the same period. Bitget's token was pretty good at the beginning of the year. So interestingly, even in a year when the whole of the money was underperforming, some exchange coins ran over the market. Of course, Hyperliquid has performed well from the issuance of tokens a year ago to the present, although it has recently withdrawn some. Overall, however, the possession of these tokens is, to some extent, an exposure to the ecosystem as a whole. That is why I think it makes sense。

AS YOU MENTIONED, BNB CERTAINLY PERFORMED VERY WELL. ALSO, USERS CAN STILL BENEFIT FROM A NUMBER OF ONGOING AIR-DROPING MECHANISMS. SOME “PERMANENT AIRDROP” STRUCTURES MAY BE SEEN IN THE FUTURE, CREATING CONTINUED VALUE FOR THESE TOKEN HOLDERS. IF THE CURRENCY ECONOMY IS PROPERLY DESIGNED, THEY CAN INDEED HELP THESE PLATFORMS TO ESTABLISH THEMSELVES IN THE FIELD OF ENCRYPTION. OF COURSE, IT IS IMPORTANT TO EMPHASIZE THAT MOST OF THE PROJECTED MARKET TRANSACTIONS ARE STILL CONCENTRATED ON SPORTS GAMES, A DIFFERENT MARKET. HOWEVER, THE AREA OF ENCRYPTION SEGMENTATION IN THE FORECAST MARKET REMAINS A NICHE MARKET THAT CAN BE BUILT ON A SUSTAINABLE BASIS。

Laura Shin:

Before we discuss in depth how you predict the market for specific transactions, I would like to ask you to explain: what is the difference between predicting the risks of market transactions and the normal coded transactions

Markus Thielen:

Sure. The forecast of market transactions isEvent ContractAnd these contracts have oneClear end timeI don't know. It's similar to options, and it's kind of like early encrypted futures. There was a due date, not a permanent contract that was being traded. There's certainly a maturity date for options; and encrypted assets, such as Yamamoto, you can see it as oneOpen optionsI don't know. As long as you continue to hold it, you will always have the opportunity to earn the money back, or even to earn more。

But this is not the case in the forecast market. The contracts for the market are forecast to have a definite end. Some contracts are long and some are short. Their core is based onProbabilityIt works. It's essentially a..barrier optionI don't know. You need to really understand what probability you're implying and at what price you buy。

In general, the price of these contracts isOne cent to 100 centsBetween, that's..0.01 to $1I don't know. If you're here60 centsBuying a contract is equal to the probability that you're in custody for this incident60%I don't know. And most contracts are structured in a binary event like yes/ no. SoThe timing is criticalI don't know。

For example, if you're betting bitcoin on $100,000 by the end of the year, then the contract is..31 DecemberIt's over. If you just bought bitcoin itself, then even if it only reached $100,000 on January 1, you could still make money. But in predicting the market, you lose because the contract has expired. Thus, these contracts are in essence probabilistic options contracts, not transactions that can be held long-term and await narratives。

In addition, probability changes. We have seen this, for example, when Trump suddenly started interviewing new Fed presidents, the market's probability for some candidates changed. I remember the Financial Times reported that Trump was interviewing more people this week, and that Kevin Hassett's chances of becoming the Fed's chairman were from80% down to 70%The whole process took only a few minutes。

Professional traders will see news titles first, quickly adjust positions, re-pricing and profiting from them. And if you're just an unprofessional trader, it'll take two days to notice, and even wonder why your own P& I've changed. This is the advantage of professional traders: they are at the centre of news flows, traffic flows and liquidity flows, which can vary greatly。

Laura Shin:

Okay, so let's talk about a specific article you wrote, entitled "Polymarket's Virtually 63% Bitcoin Deal." Can you explain what this deal is? How have these figures been calculated? Why can it achieve 63% of the annualized gains in almost certain circumstances

Markus Thielen:

Yeah. This is what we're talking about60% of annualized earningsIn fact, it's about the end of the yearAbout 4% absolute returnI don't know. For many encrypted traders, 4% may not look very high, but a very small return. But if you put it in a space of only a few weeks, it's actually a very good annual gain. Especially when you can keep your money rolling between transactions, the proceeds will be magnified. I think the point is to find thisHigh certainty transactionsI don't know。

We've listed all of them in the reportTen different strategiesFor information and use. The specific deal you're talking about is aboutBITCOINETFSPREAD OUT. THE QUESTION IS: WILL THE INFLOW OF BITCOIN ETF IN 2025 EXCEED 2024? IF YOU PUT THE DATA TOGETHER: LAST YEAR, BITCOIN ETF WAS ATTRACTED$33.6 billionInflows of funds; this year, about$22 billionI don't know. There's one in the middle$11 billionTHE GAP. SO THE QUESTION IS: FROM NOW ON TO THE END OF THE YEAR, IS IT POSSIBLE TO ATTRACT BITCOIN ETF AGAIN$11 billionMoney

We can analyze the problem mathematically. We can calculate probability. We can runMonte Carlo SimulationJust like we did in options pricing. We ran away200,000 simulation pathsThe results show that the probability of this happening is almost universalnilAnd, to be precise, seven decimal places. But even so, you can still get it through this dealAbout 4% of the proceedsI don't know。

SO IF YOU THINK THAT THE INFLOW OF BITCOIN ETF IN 2025 IS UNLIKELY TO EXCEED 2024, BECAUSE THAT MEANS AN ADDITIONAL $11 BILLION IN INFLOWS IN A VERY SHORT PERIOD OF TIME, THEN YOU CAN DO THIS。

There's only one left14 to 15 trading daysTHERE'S CHRISTMAS BREAK IN THE MIDDLE. WE KNOW THAT SINCE OCTOBER, ETF INFLOWS HAVE SLOWED MARKEDLY. ON AVERAGE THIS YEAR, THERE'S NO DAILY INFLOW$100 millionI don't know. But to achieve this goal, we'll need it every day$700 millionThe inflow seems highly unlikely. Especially at the Federal Reserve Conference, if Powell behaved more hawks than the market had generally expected, this would further discourage institutional investors from participating. So, in short, from a mathematical point of view, this is almost impossible。

But the market still leaves you one to earn4% ProceedsSpace, you just have to stand in the opposite direction of this deal. We have observed many similar transactions — almost impossible in mathematics, but the market still offers price premiums. This is how we look at markets。

Laura Shin:

In another blog post that you're writing, you have a lot of different strategies for making money in the forecast market, and..You don't even need to have any opinion or judgment about the incident itselfI don't know. I find this very interesting。Let's just say one thing. The first strategy you call itcross-market arbitrageI don't know. Can you explain what this means and how you use this strategy

Markus Thielen:

Sure. If Kalshi and Polymarket give different probabilities for the same event, then this in itself constitutes an opportunity for arbitrage。

For example, contracts related to US elections, or future mid-term elections, or contracts such as “who's the next Fed Chairman”. These probabilities may be adjusted faster on one platform than on another, depending on the professional marketers and participants on the platform. Such transactions are often more systematic and requireVery fast trading execution capacity and sufficient fundsI don't know。

Because, unlike an encrypted exchange, in predicting markets, you can't move stable currencies between platforms as quickly as you do in an encrypted market. But it is indeed a strategy。

If the two platforms give a very different rate of compensation for the same event, you can do more on one platform, empty on the other, and thus hedge risks. This is our listOne of the lowest-risk strategiesI don't know. We rank these strategies in the report, ranging from the lowest to the highest. We tend to be involved in thatMinimum risk strategyThis is because historically, these strategies make money with the highest probability. And those transactions that are “on the moon”, i.e. those in which extreme results are noted, are often not successful. Smart traders, marketers, usually put money inHigh probability transactionsUp, not low probability。

Laura Shin:

Does that mean, in practice, you place the same amount on two markets? And whatever happens, you make the difference between winning and losing

Markus Thielen:

Yeah, basically. Of course, you need to consider the transaction costs. Kalshi, for example, would have some costs, and Polymarket might not have, or would have different cost structures. There are indeed minor differences between the two platforms, and they are not as easy to design for arbitrage. This is somewhat like the case with the early encryption market: arbitrage between different exchanges was not easy at the initial stage. But arbitrage opportunities do exist。

This opportunity was particularly evident during last year ' s general elections. Because the crowd structure that was traded on these platforms was different, and as Polymarket entered the United States market, these differences could gradually disappear。

Laura Shin:

I want to make sure that when you say the platform doesn't make arbitrage easy, you mean they areI mean itIs it designed like this

Markus Thielen:

No, it's not. I mean, on Polymark, you can move encrypted assets very quickly, almost instantaneously. But in Kalshi, you need to transfer the money ahead of schedule, where the money was "carded." This is not the arbitrage environment of a modern encryption exchange. In the encrypted market, you can move USDC or USDT between different exchanges at any time。

Laura Shin:

Got it。The next strategy you callendgame bottomOr..post-state arbitrageI don't know. How does this work

Markus Thielen:

YEAH, IT'S KIND OF LIKE THE TIME DECLINE WE WERE TALKING ABOUT. I'VE JUST EXPLAINED IT IN BITCOIN EXAMPLE. WHEN WE WERE VERY CLOSE TO THE EXPIRATION OF THE CONTRACT, SOME OF THE ODDS WERE ALMOST MATHEMATICALLY ESTABLISHED, BUT THE PRICE DIFFERENTIALS IN THE MARKET WERE NOT FULLY REDUCED. ON THE DAY BEFORE THE EXPIRATION OF THE CONTRACT, AND EVEN A FEW HOURS BEFORE, THE RESULT HAD LARGELY BEEN DECIDED. NOW, FOR EXAMPLE, IT'S ALMOST IMPOSSIBLE FOR A BITCOIN ETF TO SUDDENLY HAVE AN INFLOW OF $11 BILLION. MATHEMATICALLY, IT'S IMPOSSIBLE. SO WE'RE WILLING TO BET AT THIS TIME BECAUSE WE CAN GET IT4 per cent gainI don't know. And four percent of the proceeds, if you look at it as a year, are actually a pretty good return。

Laura Shin:

Yeah, I had a similar feeling when I read those strategies. It's like a day-to-day trader's mindset, and as long as you do enough, the gains will accumulate。So the next thing you mentionedtime decay captureIt's actually in the same category as this one, right

Markus Thielen:

Yes, they do. Typically, time-depletion capture corresponds to a situation where:Markets still overpricing volatilityI don't know. For example, do you think bitcoin will win gold this year? So far, bitcoin has been almost flat this year, and gold has risen about60%I don't know. There are only three weeks left. If you bet "bitcoin won't win gold this year," you can still get itAbout 4%I don't know. This is the time-depletion capture strategy. From the perspective of options pricing, we find that the implied volatility of these transactions is too high。

Laura Shin:

There's another strategy that you call itmake price differential harvestingI don't know. Can you explain what this means and how you use this strategy

Markus Thielen:

Sure. I'm more interested in the market price differenceFor professional tradersA strategy. Such a strategy usually occurs when markets are highly volatile but relatively under-liquid. In such cases, some traders would buy directly from the market price list rather than using the price limit list. As a result, market prices are rapidly moving. We have seen this: retail traders buy directly at market prices, when the difference has been raised because of the volatility of markets. This provides arbitrage space for market vendors。

However, such strategies are better suited to professional traders with mature trading systems. It's similar to the strategy we use for marketers in encrypted exchanges, traditional financial institutions. OnlyHigh volatility, low liquiditySuch a strategy would be effective only when it was considered too high for liquidity。

Laura Shin:

This strategy, it sounds, relies to some extent on the trigger of news events and emotionalizes market participants。How do you prepare for this in advance, as a market dealer? You're putting up a price limit in advance and waiting for market fluctuations

Markus Thielen:

In general, market-based chambers of commerce maintain a limited list of prices in the market. When prices begin to move, the trading system automatically removes these orders from the market. We often see this in the encryption market. For example, there are a large number of liquidation stop-loss statements above a key price level, and when prices are close to those prices, these orders suddenly disappear。

Professional traders do similar things. So ultimately, it depends on how your trading engine is set. The point is, are you trading with those already hanging orders in the market, or are you trading with those market lists that “must be done immediately”. In many cases, traders place a very low-priced, limited purchase price in the market and then leave a computer or mobile phone. When markets suddenly fluctuate sharply, these orders may be closed. These strategies are not new to professional traders, but not to everyone。

Laura Shin:

Then the next strategy you callprobability compression playI don't know. What exactly does that mean

Markus Thielen:

A good exampleAFTER THE FOMC MEETING IN OCTOBERI don't know. At that time, there was a huge change in the market ' s probability of falling interest rates in December. Until then, the market almost thought that the December interest rate reduction was a crucible80% to 90%BETWEEN. BUT IN OCTOBER, AFTER THE FOMC MEETING, THE PROBABILITY SUDDENLY FELL30%I don't know. Then the Chairman of the Federal Reserve of New York, Williams, came out and said that the interest rate reduction was still fundamental and that the probability came from30%, back, 80%I don't know。

So you can see that the probability has fluctuated in a very short time. This strategy is not entirely risk-free, because you need it in a wayMake a judgmentYeah. But if the probability has been pushed to very low levels, for example30%And you think the Fed wants at least one market to be maintained before it makes a decision50/50It is logical to buy this probability。

The same logic applies to the question of the Fed's chairmanship. As you are all aware, the regular Telang sessions keep decisions until the last minute. If a candidate's probability is priced early80%, even higherThen you can choose to do the opposite deal and wait for the probability to fall. This is a probabilistic transaction where the time is still longer but market pricing does not reflect real uncertainty。

Laura Shin:

You mentioned it before. You'll try to avoid it"long shots"that is a very low probability transaction. Can you explain why

Markus Thielen:

Yeah. The so-called low-probability transactions usually refer to those underpriced10 centsThe contract, the market thought it was less likely10%The event. There are studies showing that60% of the lost money is in these low-probability transactionsI don't know. The mind of the deal is very much like a lottery ticket: you spend five cents on a contract, and if something happens, you get a dollar, and it looks very attractive。

But in the long run, such strategies are almost doomed to loss. Just like the American lotteries study: if you analyze lottery purchases by postal code, you find it highly correlated to income levels. This is the same in the forecast market. Many people are attracted to the possibility of “excessive returns”, but the real probability of these transactions is extremely low。

Professional traders would not do so. They'll put the money inHigh-probability transactions gradually retreat to certaintyGo on. This is where the money is actually made。

Laura Shin:

It's actually the next kind of strategy. I think this kind of strategy is interesting, because from my point of view, it's kind of like "a single deal." One of them you call itliquidity imbalance tradingOr..following large resource flowsI don't know. Can you explain what this means and how ordinary people use this strategy

Markus Thielen:

sure. these platforms usually claim that they provide what is known as “wisdom of the crowd”, that is, gathering information through crowdsourcing. but in my opinion, the more accurate term should be:"wisdom within the crowd"I don't know. 'Cause there's gotta be some of these guysBig playersI don't know. They may have better information and be able to position themselves. If they had a lot of confidence in a certain result, they would be next big one. It's kind of like a paper deal, but only if you find itA real good traderI don't know。

We have seen a similar situation in the encryption market, where some of the best-performing wallets are tracked and analysed by various tools. Similar things can actually be done in the forecast market. For example, who has a higher historical winner? Who continues to place large and stable amounts in a particular area? Who does seem to have some kind of advantage? Following their financial flows is a viable strategy. It's not a blind copy of a deal, it's a recognition of thatParticipants with a long-term advantage in a categoryI don't know。

Laura Shin:

Is it as difficult to identify these accounts on different platforms? Wouldn't it be easier on Polymark, for example, because it's more encrypted

Markus Thielen:

Yes, exactly. YesPolymarketIt's possible. And..KalshiOn the contrary, I don't think that's possible at this time。

Laura Shin:

Okay, what's your next strategyprice sensitivity screeningI don't know. Can you explain what this means and how you used it

Markus Thielen:

Here we return to the concept of one-touch barrier options. Take bitcoin, for example. Like a contract: Will bitcoin touch $100,000 by December this year? This is essentially a one-touch barrier option. We can compare this probability with the implicit volatility in traditional options markets like Deribit or IBIT. In Deribit, whether or not the option touches a price on its maturity date is different from “win if you touch it once” in the forecast market. As a result, the rate of implied volatility in the market is forecast to be naturally higher。

But the problem is:How high is it

We can compare the curvature of options in different markets to see if the probabilities given by the forecast markets are significantly higher than those of institutional options. When we published the idea of a deal, the probability that Polymarket implied was about60%And thought bitcoin would touch $100,000. But in traditional options markets, there's only an implied probability10% - 15%i don't know. even considering that one-touch structures require higher volatility, the gap between the two remains very large。

Note: Pricing in projected markets clearly reflectsThe optimism of the diasporaI don't know. In such cases, you can sell this probability in the forecast market, while hedge in the options market. That's the kind of thingCross-market probability arbitrageI don't know. So far, this strategy seems to be working pretty well。

Laura Shin:

The next few strategies seem to be somewhat similar. One of them you call itconditional hedgingI don't know. Can you explain how this works

Markus Thielen:

Yeah, it's more of a peaceMacro event riskRelevant. This is actually one of Kalshi's core arguments when he got CFTC permission in 2024: predicting the market can be usedMatching real-world resultsI don't know. For example, if you want to break a certain level of hedge oil prices, this is not easy in traditional futures markets because of complex settlement rules and high risk of delivery. In the forecast market, these problems can be reduced to a “yes/no” event. This is very similar to the structure of certain insurance contracts。

Laura Shin:

The last strategy is..organisationI don't know. What's the difference between that and the deal

Markus Thielen:

OrganisationTime knownSpread out. For example, elections to the Fed, major political events. Conditional hedges usually mean that you are exposed to some kind of risk in the real economy, and market forecasting is a hedge tool. The event calendar strategy is more like a transaction around the event itself. But I don't want to complicate things. In terms of resultsthe strategy of making real money is still focused on endgame bottom and time loss captureI don't know. Not the extreme bets of the Moon。

Laura Shin:

Thank you very much for telling me all these strategies. I think it really shows how detailed the forecast market can be analysed. The first reaction of many people to predict markets is, "You're guessing what's going to happen in the future." In practice, however, you do not need any information about the event itself, but you need to judge whether the probability of different outcomes is reasonably priced。

Laura Shin:

By the end of the day, what important aspects of forecasting the market are I not asking, but do you think the audience should know

Markus Thielen:

I think we've covered a lot. The point is, you see the forecast market as a kind of..Entertainment FormsIt's just like thatProbability marketI don't know. If you're just for entertainment, it's like any entertainment consumption, you're paying for admission, and you should not complain about the end result. But if you're probabilistic, then you find that more and more professional traders are entering the market and pricing these events using probabilistic models。

That is also the central message that we want to convey to subscribers: predicting markets is a probabilistic market, not an opinion market. The money doesn't come from 100% of sure results, but fromHigher probability sideI don't know. At the end of the day, it is still the words: not the wisdom of the masses, but the wisdom of the masses. This is a theme that will grow steadily until 2026。

Airdrops may be a very interesting catalyst, and as trading activity increases, forecasting markets becomes increasingly important. And that's why we're seeing companies like Robinwood get into the field -- everybody wants to split the cake. We want to be ahead of this trend, so we look at these transactions and explain how to make money in the forecast market。

Laura Shin:

Markus, it was nice talking to you today. Thank you very much for coming。

Markus Thielen:

Thank you for the invitation。