16h ago
The Good and Evil of Insider Trading: The Ethical Boundaries of Prediction Markets
In the traditional financial world, insider trading is a crime.
It symbolizes a few individuals profiting from information that has not yet been made public, taking advantage of the ignorance of the majority, and is the most direct betrayal of a "fair market."
But in prediction markets like Polymarket, the logic is reversed.
When the goal of pricing is no longer to exploit price differences but to approach the truth,
those who possess information become the "calibrators" of the system.
Polymarket has never been a casino.
It is an information market, a decentralized truth machine.
Every price, every bet, is a collective prediction of humanity about the future.
YES = 0.83, is not just the betting ratio, but what the market is telling you:
"There is an 83% chance this will happen."
Here, voting does not rely on ballots but on money.
Betting is not gambling, but a cost-bearing expression of belief.
Thus, when certain individuals know the outcome in advance, their betting behavior becomes a "signal of reality."
Nine hours before the announcement of the 2025 Nobel Peace Prize, Maria Machado's winning probability soared from 3% to 70%.
That was not a surge in public sentiment, but a trace of information flowing in advance.
While the media was still speculating, Polymarket had already provided the answer.
The market reveals the truth through prices in advance,
this is an extremely calm wisdom—
it allows information to complete self-verification through the flow of funds.
The existence of this phenomenon forces us to acknowledge:
In prediction markets, "insider" is not a crime,
but a mechanism for information correction.
When informed individuals place bets, prices move closer to the state of the real world.
The original intention of Polymarket's design
is not to eliminate uncertainty, but to combat the unknown with probabilities.
From this perspective, insider trading has become a necessary evil for the system's operation.
However, the other side of the truth is the dilution of trust.
When a few individuals can always know the outcome in advance,
is this game still fair?
When the truth is priced, trust begins to decouple.
Prices become more accurate, but participants grow increasingly suspicious:
"Is this yet another manipulated truth?"
The ideal of prediction markets is transparency and efficiency;
but when efficiency is too high, the sense of fairness begins to erode.
Regulators have also seen this crack.
Kalshi has obtained CFTC compliance approval in the U.S.,
while Polymarket has found a new balance between punishment and return.
They understand that the problem lies not in "prediction," but in "abuse."
Thus, Polymarket's answer is—
to offset information inequality with on-chain transparency.
Every bet, every wallet, every transaction record is public.
Tools like Hashdive and Polymarket Analytics
can even allow you to trace "smart money" and potential insiders.
Here, insider information is no longer hidden in the dark,
but is openly recorded on the chain.
Perhaps we need to redefine "insider."
In the world of blockchain, it is no longer a conspiracy,
but a difference in information speed.
Some know the answer a few minutes earlier than others,
and in a completely open system, this is no longer a crime,
but a natural order of information flow.
The real injustice is not that some know earlier,
but that the majority see the data yet are too lazy to understand it.
What Polymarket represents is a new information order:
Let the truth be traded, let transparency become the new fairness.
Here, the market is not a stage for wealth,
but an arena for cognition.
You could say that pricing the truth is a provocation to ethics.
But on a deeper level, it is a decentralization of "knowledge" itself.
When the value of information is quantified, when cognition is voted on,
society enters a new stage—
the truth also begins to circulate.
And in an era where information is bought and sold,
the only fairness you can maintain
is to learn faster, see deeper, and understand earlier.
The existence of Polymarket is not about winning or losing in gambling,
but about humanity using financial language
to redefine "the price of truth."
Perhaps insider information will never disappear,
but at least, for the first time, we have the opportunity to see its trajectory.
The price of truth may be the cost of fairness.
But letting the truth flow is always better than letting it be monopolized.
Discover a prediction market bot:
Note: Interested friends can try it out; the tool is for sharing only and not investment advice.
#Polymarket
3d ago
Polymarket: When Truth Has a Price
"If the crypto world is an emotional market,
then Polymarket is a rational market."
In the past two years, Polymarket's trading volume has exceeded $15 billion.
This is not just an ordinary betting platform, but a "truth machine" running on the blockchain.
In this machine, every market price represents the collective probability judgment of humanity about the future.
1. What is Polymarket?
Polymarket is a decentralized prediction market.
Here, people express their beliefs about future events with money.
It allows users to bet on any event you can imagine:
Who will win the next U.S. presidential election?
When will the Ethereum spot ETF be approved?
Will Monad airdrop before the end of October?
Each market consists of two types of tokens:
🟩 YES (event occurs)
🟥 NO (event does not occur)
When you invest 1 USDC, the system automatically generates a pair of YES/NO tokens.
If the event occurs, your YES token can be redeemed for 1 USDC;
if it does not occur, your NO token becomes worthless.
You can trade at any time, and the prices of both will fluctuate with market sentiment and information updates.
Therefore, the price on Polymarket is not the ratio of "bets," but the market's perceived probability of the event occurring.
For example, when the price of the YES token in the "Trump winning the election" market is 0.68,
it represents that the market believes Trump's winning probability is about 68%.
2. Turning Beliefs into Tradeable Prices
In the traditional world, predictions come from experts, media, polls, or institutions.
But in Polymarket, predictions come from the market itself.
Economist Robin Hanson proposed a theory in the 1990s:
Information Aggregation Hypothesis
When each participant expresses their beliefs with money, market prices become a weighted average of all information.
This means that—
Polymarket's prices are not a reflection of emotions, but an aggregation of information.
It folds together the cognition, judgment, and even "insider information" of thousands of individuals,
into a single probability: how likely is this event to occur?
You can think of Polymarket as a "decentralized probability engine."
Each market is a real-time updated "belief price."
When external information changes, the price automatically adjusts.
In this process, the market completes the aggregation of truth.
3. Insider Information and Truth Speed
One interesting aspect of prediction markets is that they do not exclude "insider information."
On the contrary, they utilize insider information to make the market faster and smarter.
Take the 2025 Nobel Peace Prize as an example.
Nine hours before the official announcement of the winner,
the price of the YES token for "Will Maria Machado win?" surged from 3% to 70%.
Someone knew the result in advance.
A wallet placed a $50,000 bet before the result was announced, participating only in this market.
This is clearly not a coincidence—this is typical insider behavior.
But what was the result?
The price surge became a prelude to the fact.
When the official result was revealed, Polymarket had already reflected the truth in advance.
Norwegian regulators launched an investigation afterward,
but economists pointed out:
"Such insider trading is not only harmless in prediction markets, but it also makes prices more accurate."
Because insider trading here is not "deception,"
but a process of information transmission.
The market absorbs real information through prices,
allowing everyone to see the shape of the future earlier.
4. Under the Technology: Polymarket's Prediction Engine
The technical architecture of Polymarket is far more complex than an ordinary DApp.
It runs on the Polygon blockchain,
using UMA Oracle to verify event results.
The core matching system is based on CLOB (Central Limit Order Book)—
which is a limit order book mechanism similar to centralized exchanges.
At the user level, Polymarket provides data through three main technical components:
This means that any developer can access Polymarket,
real-time obtain on-chain prediction market order books and transaction data,
or use the SDK to build automated trading bots.
Essentially, Polymarket is no longer just a prediction platform,
but an open "on-chain information market infrastructure."
5. The Flow of Beliefs: Data and Behavioral Feedback Loops
Another unique feature of Polymarket is its data transparency.
Every transaction, every market price, every order,
is available for real-time querying, analysis, and modeling through interfaces.
Thus, a whole new analytical ecosystem has emerged:
1/
2/
3/@WhaleWatchPoly: Monitoring large transactions and wallet associations.
These tools have built a "prediction data universe,"
where researchers are even analyzing which wallets are best at betting on outcomes,
and which wallets' bets trigger price movements.
Prediction markets are no longer a one-way betting game,
but a cycle of information—trading—price—feedback.
Every buy and sell pushes the formation of "truth."
6. Why Polymarket Represents the Future of Information
From a broader perspective, the significance of Polymarket transcends the crypto market.
It redefines the essence of "news."
The traditional path of information dissemination is:
officials → media → the public.
But in the Polymarket model:
insiders → trading → price → everyone.
Price becomes a new "public news format."
You no longer have to wait for journalists to publish or institutions to report,
just look at Polymarket's prices to know where the world is heading.
In fields like crypto, politics, technology, and sports,
prediction markets are becoming the intersection of information authenticity and social expectations.
It reconstructs humanity's "probability consensus" in a decentralized way.
7. Conclusion: Truth Has a Price
The emergence of Polymarket
has quantified, made tradable, and verifiable the "truth" for the first time.
It does not rely on authority or institutions,
but is driven by collective wisdom and incentive mechanisms.
"It digitizes beliefs,
turns predictions into assets,
and makes truth something that can be traded."
In this process, human society is undergoing a quiet revolution—
truth no longer belongs to the media or experts, but to all who are willing to bet.
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