1 Dollar Return Rate Only 43%, Why Are 87% of Polymarket Users Losing Money?
In the prediction market Polymarket, analysis of 72.1 million trades reveals that 87% of wallets lose money, while only 13% consistently profit. The key difference lies in the application of game theory and mathematical strategies, not luck.
Five core formulas separate winners from losers:
1. **Expected Value (EV)**: Winners calculate EV to identify undervalued contracts, while most traders rely on intuition. Makers (limit order placers) profit by waiting for positive EV opportunities, while takers (market buyers) lose ~1.12% per trade on average.
2. **Mispricing**: Low-probability contracts (e.g., priced at 1¢) are systematically overpriced, with actual win rates as low as 0.43% (a -57% deviation). High-probability contracts are often undervalued. Takers overpay for "cheap" lottery-like bets, while makers capture this inefficiency.
3. **Kelly Criterion**: Used for optimal position sizing. It maximizes long-term growth but is often applied fractionally (e.g., 1/2 or 1/4 Kelly) to reduce volatility.
4. **Bayesian Updating**: Profitable traders adjust probabilities rationally as new information emerges, unlike emotional overreactions or inertia from others.
5. **Nash Equilibrium**: The market structure evolves with participant behavior. In emotional markets (e.g., sports, entertainment), mispricing creates opportunities for contrarian strategies. As professional market makers enter, spreads tighten, and inefficiencies shrink.
The conclusion: Persistent losses stem from emotional trading, overpaying for low-probability bets, and neglecting mathematical discipline. The winning minority uses these formulas to exploit market biases systematically.
Odaily星球日报03/30 08:03
