How to Earn $100,000 Through Prediction Market Arbitrage?
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How to Earn $100,000 Through Prediction Market Arbitrage?
The same event is priced differently across platforms, and that's where the opportunity lies.
Navigating Web3 tides with focused insightsAuthor: Pix
Translation: Luffy, Foresight News
Most people gamble in prediction markets, while I arbitrage them. Below is my specific strategy for earning $100,000 from fragmented and inefficient prediction markets.
Step 1: Understand the Rules of the Game
Prediction markets allow you to bet on real-world events, such as:
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"Will Ethereum reach $5,000 by year-end?"
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"Will MrBeast run for president?"
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"Will Kanye West launch a token?"
Each market has different user bases, each with their own biases. This means the same event may be priced differently across platforms—and that’s where the opportunity lies.
Example: If Platform A prices “Yes” at $0.40 and Platform B prices “No” at $0.55, you can lock in a risk-free profit of $0.05 regardless of the outcome. This is arbitrage.
Step 2: Find Your Edge
The most effective strategy for me involves multi-outcome markets, which are most prone to mispricing.
Examples:
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Who will win this weekend's F1 race?
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Which political party will win the UK general election?
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Who will be the next person eliminated on 'Love Island'?
In theory, the sum of probabilities across all outcomes should equal 100%. In reality, it often reaches 110% or more.
Why? Platforms typically charge hidden fees ("overround") and odds are set by users, leading to widespread pricing inefficiencies.
Step 3: How to Identify Arbitrage Opportunities
Core rules:
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Find the same event listed on different platforms;
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Select the lowest price for each possible outcome;
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If the total cost is less than $1, arbitrage is possible.
Real example: Who will be the next pope?
Quoted prices from two platforms:
The strategy is to buy all possible outcomes—knowing one must resolve to $1. Each trade yields a $0.021 profit (a 2.1% risk-free return). That’s arbitrage. You’re not betting on who becomes pope—you’re betting that the two platforms won’t agree on who becomes pope. And when they disagree, you profit.
Myriad has much lower liquidity, but two other websites offer tighter spreads. The more markets you monitor, the greater your edge.
I usually only act when APY exceeds 60% (APY = (spread / resolution days) × 365).
In this case, the event resolves in 29 days:
(0.021 / 29) × 365 ≈ 26.4% APY (below my 60% threshold—pass).
If the event resolved in 7 days:
(0.021 / 7) × 365 ≈ 109.5% APY (definitely enter).
Step 4: Racing Against Time
Prediction market arbitrage is a game of latency:
After price discrepancies appear, you typically have minutes—not hours—to act. Rumors spread quickly, platform updates lag, and these gaps create opportunities. Your edge exists only during this brief window.
If possible, automate this process. Use price alerts on Discord, Telegram, and Twitter. Sometimes I spot spreads purely out of muscle memory. The faster you act, the more you earn. Hesitate for five minutes, and the spread vanishes. My best-ever spread was 18%—quite profitable.
Pro tip: Ensure funds are available on all platforms and fully understand fee structures.
Step 5: Exit Early
Most people wait for final resolution. I cash out before the outcome is clear.
Suppose I bought all outcomes for $0.94, locking in a $0.06 spread. I don’t need to wait. If the market tightens, I can sell my position at $0.98 or $0.99 and exit immediately.
This significantly boosts APY and allows quick rotation into the next market.
Bonus Tips
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Look for overlapping events: e.g., "Trump wins 2024 election" vs. "Republican Party wins" may hide arbitrage;
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Target small markets: more mispricing, less competition;
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Leverage niche platforms: wider spreads, potential airdrop rewards;
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Read settlement rules carefully: a single word can change everything;
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Double-check everything: verify order books, execution prices, and include all fees in calculations.
Summary
I earned $100,000 in just over two months—a mix of quiet and intense periods. Higher volatility creates more spreads, but even in calm markets, there’s always another inefficient market waiting to be found.
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