brypto

Geopolitics

Writer, podcaster, and commentator on foreign affairs and politics. Loves history, languages, technology, and philosophy. I’m also on X at Mazmhussain.twitter

Our beloved betting markets did not do great on this one either:

I forget who casted it, but someone here made the great point that political markets don’t actually “predict” outcomes very well

They mostly just track other people’s sentiment until the end and then whiplash to converge with the outcome (mostly just arbitrage at that point)

That’s probably why liquidity is so poor

I am not sure how well prediction markets can actually predict outcomes reliably. My hunch is that a lot of MEV is happening in the sense that accounts try to shave off basis points for profits.

That MEV improves liquidity. I think there are two reasons why liquidity is not always great and why markets don't always get it right. 

For one you got only a rather smallish user base participating. And then people make bets that are not too well informed. For instance, how well do Americans predict outcomes of French elections?

What's likely to happen often is that some competent users get it right but they are the drop in the ocean amidst a sea of MEV.