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Author: ASXN, Digital Asset Research Company; Translation: Bitchain Vision Xiaozou
1The rise of gaming culture:Polymarketoverture
In the past ten years, the gaming culture has grown significantly, and social, technical and economic factors have been a common driving force.We can better understand the rise of PolyMarket in a macro trend of gaming culture as a macro trend.
(1) Social and cultural factors
From the perspective of social and cultural factors, the most striking change is the normalization of gaming, especially in the group of young people and sports enthusiasts.The reason for this normalization is the practical income of this culture. When there is capital risk, more betters will participate in it, and form a community consciousness with other betters.In short, when a group of people gather together to watch a sports competition that has been bet, it will obviously get a lot of attention for people to talk about it.
(2) Technical progress
The emergence of mobile technology has completely changed the accessibility of the gaming industry.Smart phones provide a fast, convenient and private gaming platform to stimulate mobile gaming activities.This ease of use greatly promotes impulse betting, because users can bet on anything at almost any time and anywhere.
(3) Wealth inequality intensifies and intensify1000XThe rise of gaming culture
In recent years, wealth inequality has become a major issue in our era.The gap between the rich and the poor has continued to expand, which has a huge impact on the economy and society.It is estimated that 1%of the world’s richest population now has more than 50%of total global wealth.This will have a profound impact and affect all aspects of political stability to social liquidity.The increasing wealth inequality and the limited social liquidity jointly spawned the rise of 1000X gaming culture, that is, an ordinary person must have a lot of prizes in the lottery of a lottery to achieve financial freedom.A typical example of the 1000X gaming culture is the rise of multiple bets. The betters optimize the odds by superimposing conditional bets. It is expected that their 527: 1 bet can be harvested, but the result is often hope to fail.
Online gaming market quantification -data source: statista
The online gaming market revenue is expected to reach $ 97.7 billion in 2024.
· The expected annual growth rate (2024-2029 compound annual growth rate) is 6.46%, and the market size is expected to reach US $ 133.6 billion by 2029.
· By 2029, the number of users in the online gaming market is expected to reach 281.8 million.
· In 2024, the user penetration rate will reach 5.9%, and it is expected to reach 7.4%by 2029.
The per capita income (ARPU) is expected to reach $ 450,000.
· From the global perspective, most income will come from the United States (2024 will reach $ 25 billion).
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From a macro perspective, it is necessary to connect the rise of gambling culture with the rise of online culture.Once the average online time of users in the Z is more than 9 hours per day. If you think about it carefully, this is definitely an amazing number.In addition, most people in the Z generation have not yet reached the age of work, so the internet time of more than 9 hours a day can be largely attributed to sufficient time.56%of the Z -generation Z and 48%of the millennial generations indicate that they are “addicted” to mobile phones. These mobile devices are not important in our daily life.Especially due to the 2019 new crown epidemic and its influence on social relations and mental health, people have a longer internet time.
The rise of network culture provides fertile soil for the development of online gaming and seamlessly integrates it into daily digital life.The continuous progress of technology, coupled with strategic marketing and social specifications that changes from time to time, all show that online gaming will still be an important aspect of online culture.
2As well asPolymarket
For those who don’t know what Polymarket is, the following is a brief introduction to Polymarket.
PolyMarket is a predicted market platform based on encryption technology. Users can specify the results of various events in the real world through transactions in the information market.Polymarket is based on Polygon, allowing participants to buy and sell events Shares (share), and use group wisdom to predict future events.The platform covers a wide range of themes, from politics and economy to sports and entertainment, providing people with a transparent access to express their views, and may profit through their knowledge insights.
(1) Compared with other gaming platforms,PolymarketHow to succeed
Due to the thoughtful marketing, the growth of 1000X gaming culture and its unique features, the rise of Polymarket can be described as amazing.Polymarket’s marketing enables it to use the native culture of the Internet. Specifically, the Polymarket X account has led the platform’s growth through massive posts, which resonates with the CT encrypted native community.PolyMarket provides users with unique features. The two most interesting functions are the ability to transaction to transactions as continuous variables, and the ability to trade market transactions -these two functions help cultivate active active active activeUser group.Finally, the rise of the 1000X gaming culture and the most difficult predicted election in the recent memory provides a perfect driving force for the growth of Polymarket.However, there are still some problems, such as: whether the Polymarket has achieved the real PMF (product market fit), and once the election is over, it will be difficult to prevent user loss.
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(2) Agreement mechanism
Polymarket’s operation is similar to any conventional exchange. It is a market. Buyers and sellers meet here to express their respective views on the price -for Polymarket, that is, the price (probability) of the event result.The transaction interval of the result is 0%(the probability of the result is 0%) to 100%(the probability of the result is 100%).Like all markets, the price of assets (probability of incidents) is determined by the ratio between marginal dollars and available liquidity.
Polymarket provides two types of markets, one is the dual result market (yes/no), and the other is the multi -result market (multiple choices, but only one winner).
(3) Binary results market
The Ethereum market set a historical high in 2024 is a perfect example of the “right/no” dual result market.The forecast market has a central price limit (CLOB). Users can set market buying/selling or set price -limited buying/sell orders. This market is almost on the market.ETHUSDT currency is exactly the same to the function.For example, whether Ethereum will set a new historical bet in 2024 and buy a $ 100 “yes” (result), then if the result is not expected, it will generate a $ 212 (100/47 * 100) income.As mentioned earlier, the novelty of this type of market is that the binary result of “yes/no” can be traded as a continuous variable, which allows market participants to adjust and position according to the new information, which also enables others to be able to be able to adjust.Feel how the viewers of other market participants have developed.
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(4.Multi-outcommarket
The second category of “yes/no” market is called a diversified result market, as shown in the figure below.In these predicted markets, there are more than one choice of users.Interestingly, the pricing method of the multi -result market is the same as the binary results -each result is separately priced, and there is no mechanical connection between the results, so the total result is 100%.We can see that the cumulative probability of the “yes” results listed below is less than 100%, within the range of 98%, which provides arbitrage opportunities for city merchants.Considering that the pricing of all the results of “No” is high, the marketing merchants can buy all the “yes” options (98%total probability) and ensure that 2%of the profit after market settlement will promote “yes”The price of the result rose comprehensively.Obviously, this is excessive simplification of arbitrage transactions -the possibility of trading costs, slippery points, and all Trump and Harris all elections have not been considered.This is just an example to explain how arbitrage acts as “soft” connections between these markets.
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(5) Condition tokens framework
All the results on the PolyMarket were to the tokens, and automatically traded on the Polygon network.Specifically, the result of Polymarket shares are binary results -yes/no, and use GNOSIS’s conditional token framework.The GNOSIS CTF contract allows “split” and “merger” complete results set.This means that for the conditional conditions (market), any user can match the mortgage (USDC) of one unit for a binary result to the tokens, or you can incorporate the one -result coin into a unit mortgage in one unit mortgageProduct.Therefore, in a market with correct structure, the market price of these tokens should always be between 0 and 1, and the total price should be 1.
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In order to better understand the split and merger, let’s take a look at the specific example of the matching of the market and the order.When the lower price order (that is,), the price limit order will also appear on the order book of complementary results (that is, no).The specific reason is that the underlying dual market is a single, the “unified” order book.
Example 1 -Bid/Price Non -complementary:
· Jack placed a price limit order to buy 10 share “yes” results with 35 cents.
· Gil placed a price limit order, selling 10 shares of “yes” results with 35 cents.
The matching calculation of this example is very simple. The 3.5 US dollars will transfer from Jack’s account to Gil’s account in exchange for her 10 share.
Example 2 -complementary bidding:
· Jack placed a price limit order to buy 10 share “yes” results with 35 cents.
· Gil placed a price limit order to buy 10 “no” results at 65 cents.
At first glance, these orders seem to be different, but please note that $ 1 can be split into one “yes” and 1 “no” at any time, so these two price limit orders can be matched.$ 3.5 from Jack and $ 6.5 (a total of $ 10) from Gill (a total of $ 10) for casting a complete conditional tokens (10 shares “yes” and 10 shares “no”), and then distribute 10 shares to Jack to Jack to Jack10 shares “No” to Gil.This matching is implemented with split operation.
Example 3 -Price Price complementary:
Jack placed a price limit order, selling 20 shares “yes” results at a price of 75 cents.
· Gil places a price limit order, selling 20 shares “no” results at a price of 25 cents.
In this scene, matching is also possible.The working principle is this. The 20 share “yes” from Jack and the 20 share “No” from Gilk is merged into $ 20 through CTF, assigned $ 15 to Jack, and $ 5 to Gil.This match is realized by merging operations.
(6.Clob
The CLOB structure of the PolyMarket order book is similar to all central exchanges and some decentralized exchanges.Polymarket Clob is currently a mixed decentralization result. There is an operator who provides chain matching/ordering services, while settlement and execution are completed on the chain without custody.conduct.The bottom layer of the trading system is a customized trading contract. According to the signing of a limited price, the atom exchange (settlement) between the binary results of the tokens and the mortgage assets is performed.The trading contract is created for the dual market and supports the unity of orders, so that an order can be matched with its complementary orders.
(7.Resolver
When related events occur, the market is settled and paid.All market settlement is completely decentralized. Most markets settled through UMA’s Optimistic Oracle (OO), and the rest of the (some price markets) settled through Pyth.In order to support the CTF market through OO settlement, PolyMarket has developed a customized adapter contract called UMActFadapter to allow two contract systems to dock.
(8) Make a market reward plan
Any market requires sufficient liquidity to run smoothly.Deep liquidity can promote effective price discovery, reduce volatility, and reduce transaction costs -lack of deep liquidity will affect the user experience and damage the use of platforms.In order to improve liquidity, Polymarket borrowed DydX’s successful incentive plan and adjusted according to its own platform characteristics.The difference between the two platforms is that the liquidity of the Polymarket dual market (the bid for A is equivalent to the price of A), lacks the pledge mechanism, slightly modified the order utility, and the reward amount in each market is isolated.The market merchant issued a limited price is eligible to participate in the PolyMarket incentive plan.Reward is a normal running time and quotation tightness (VS mid -point) function, and the order book is randomly sample per minute.
3What is the idea
(1) How accurate the market is?
It is often discovered that the national news media quoted the odds of Polymarket as a prediction of the truth -which triggered a problem. How accurate is the price result of the PolyMarket?As a result, the accuracy of the market can be interpreted from the perspective of “group wisdom”:
“Group wisdom means that in terms of problems, decision -making, innovation, and forecasting, the collective wisdom of a large group of people is more wise than a single expert.” This means that the individual’s views are essentially biased, and from a group of people, from the group of peopleThe average acquisition in the point of view can eliminate prejudice or noise, thereby forming clearer and more coherent results.——INVESTOPEDIA
The “group wisdom” framework shows that the accuracy of the prediction results is related to the number of nominal nominal bets.According to Jordi Alexander, once the market’s transaction volume exceeds 9 digits, the probability of price will be reasonably and effective.However, he also pointed out that when a result of a relatively low probability is priced, the efficiency is low, which will lead to the pricing of the result of the result of a large probability of 1%.This is a capital cost function, which is related to the result of the result of the bet “No” -the risk of 99 cents, waiting for several time to earn 1 cents.Considering how attractive the “No” options of 99 cents are, the market will eventually be able to pricing effectively.When pricing at low probability results within a reasonable time range, the implicit threshold return is also a risk -free return rate (5.5%). Therefore, due to the high cost of capital opportunities for valid pricing, the low probability may be highly priced.Essence
(2.PolymarketRight?
Some people are worried that the results on the Polymarket are affected by participation in prejudice and leaning right -encrypted native users use PolyMarket to encrypted native users right.Although these concerns are reasonable and the reasons can be standing, but if the result is wrong, someone will always be willing to participate and stand on the opposite side.Participants are always profitable, not to express political views. Therefore, the market of political results may be leaning to the right, but the wrong pricing is limited.
(3) Product market fit (PMF)?
Another question that appears in the popular words is whether Polymarket has achieved PMF, or its success depends to a large extent on the US presidential election.If we look at historical elections, we often see one or two dominant prediction market -this is the role of network effects and liquidity.
During the 2008 and 2012 U.S. presidential elections, Intrade (from the 1900s to early 2010) received great attention.However, it is facing the supervision review of the American Commodity Futures Trading Commission (CFTC) and eventually stopped operations in 2013 due to laws and financial issues.
Predictit (2014) is a very popular prediction market platform. It was launched in 2014. It supports user share results share including political events including elections.Predictit was widely used in recent elections, including the US presidential election in 2016 and 2020.
Betfaire (2000) is a large online gaming exchange that supports a wide range of markets, including political events.It has always been an important platform for predicting elections, especially in Europe.Betfair has been used for election forecasts, including Brexit referendum and various elections in Britain and the United States.It is still one of the largest and most active forecast markets in the world.
This made us think of Polymarket and the evaluation of their PMF.If we look at the top 15 forecast markets in the transaction volume, there are three indicators very prominent:
The 14 of the 15 markets with the largest transaction volume are political markets
· 99.2%(US $ 1.031 billion of US $ 1.04 billion) trading volume occurred in the political market
The cumulative transaction volume since its birth (2020) has been $ 1.1 billion, two -thirds of the transactions have appeared in the past 6 months.
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After seeing these data, whether the PolyMarket has achieved the problem of PMF becoming more and more important.Data show that the vast majorityPolymarketThe use is concentrated on the political market and the American electionIntersectionThisPolymarketBecome“Shiny new toy“Essence
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Kyle Salami of Multicoin Capital put forward an interesting point of view in his tweet. He pointed out that predicting the market and its success is really regular.The irregularities of political events means that although these markets can attract a large number of users to participate in and media attention, the frequency they occur is too low to maintain continuous user activities and income.This irregularity restricts the ability to obtain consistent lifelong value (LTV: Lifetime Value) from users, which is essential for prove that high users’ acquisition cost (CAC) rationality.From the data point of view, the logical conclusion is that if there is no election, it may be difficult for the platform to maintain a prosperous predicting market platform for users.
Judging from the existing evidence, it is undeniable thatPolymarketRecent success is almost completely the result of the election, but some people think that Polymarket has the way to transform it into a sticky user base.As the opening chapter emphasizes, the rise of 1000X gaming culture and the socialization of gambling culture will only become more and more common. PolyMarket is ready to seize the capital flow of downstream in this trend.The ability to trade dual results as a continuous variable is a new primitive that has not yet received enough attention. We believe that this is a major upgrade of the status quo of static probability.Polymarket’s user guidance process is abstract enough, so non -encrypted native users will hardly encounter any obstacles during the login process, which at least makes it comparable to Betfair and other competitions.In addition, they are essentially the web3 protocol, which makes them the most popular protocols in a market led by participants with gambling tendencies.In the end, it has to be said that so far, they have successfully funded a total of $ 70 million.Just recently, the company announced that it would complete a $ 45 million Series B financing in May. Investors include Peter Thiel’s Founders Fund and Vitalik Buterin.This track should allow them to maintain their survival while adjusting the business model.
4, Polymarket in the eyes of the city merchant
We have studied Polymarket’s protocol mechanism, but the gaming market is a double -sided test.It helps us understand those who provide us with liquidity for us.To this end, we interviewed an anonymous person.
Question: Can you tell me how do you think of the fair value of the results of the results?Is there a poisonous flow/reverse choice?
Answer: The first thing I want to say is that I manually do the market to make value from PolyMarket, rather than establishing a sustainable algorithm by providing liquidity profits.I usually have a good reference market with good liquidity.Therefore, fair value is usually the weighted average of the transaction volume of the exchange.
Q: What is your input variable?Or can you tell me about your market mechanism?
Answer: I mainly pay attention to the historical highest level of daily awards, trading volume and order book liquidity, thereby calculating the reward income.On this basis, I have a basis for how much loss I will bring to the liquidity.
Q: How do you choose the market?What do you think of the difference between a single market and a diverse result market?
Answer: I mainly choose the sports market or a market that can arbitrage. For example, “Will Bayeng withdraw from the election?” “Will Biden and Trump win nominations at the same time?”Input, it is more difficult to make a market.Price found that the market can occur in any result, and other markets need to consider this factor.
Q: How do you absorb external information (Bayes inference), how do you change your strategy/liquidity on this basis?
Answer: It is usually a desperate strategy.If there is enough obvious advantages, I will accept it.If the advantage disappears because I cannot easily consider the new market information, I will stop providing liquidity.
Q: What is the difference between the market and centralized exchange (CEX) on Polymarket?
Answer: CEX is a real market. Polymarket has more than 10%of the point difference and more serious poison.The only way to do a good job in the city is to pursue incentives.Traditional market businessmen profit in high trading volume markets like the presidential election -these companies, such as SIG or other similar large -scale marketors, make profits through structural advantages.Specifically, they are closely linked and can hedge their order books outside the field.One more thing, I have done CS: GO skin to make a market.Polymarket’s experience is very similar to the real city merchant experience.
Q: What is your biggest challenge?
Answer: Lack of profit and loss opportunities for the establishment of actual quantitative models.Sports betting also had the same problems in the early days of its market structure.Professional companies have not participated in the market, so they are very efficient, so artificial and mature city merchants can obtain reasonable gains and losses in small order books.
Question: I haven’t asked what relevant information I have asked, but you want to share it with us?
Answer: There is another thing I might mention but did not say that “being a city merchant” is likely to be using similar strategies to use the liquidity of DYDX V3Too concern.All the best order books are equal. Therefore, algorithm traders who participate in a market with stronger liquidity (such as Trump VS. Harris) can get rewards without taking the risk of greater profit or loss,EssenceThe general strategy is to provide the fastest point difference price, usually 1 pointer (1-3%, depending on the odds), and refresh your order when the next price in the execution queue.In this way, you can always provide the best order book liquidity, but in the best order book quotation, you are always ranked at the end, so your order will never be affected.I am too lazy to do so, but this strategy may have hundreds of thousands of dollars in profit or loss tables each year.
