Core Insights - The paper argues that BTC settlement in prediction markets could provide superior economics for users compared to stablecoin-denominated markets [1][2] - It critiques the current trend of using stablecoins, highlighting the opportunity cost for Bitcoin holders who miss out on potential BTC appreciation [2][3] Group 1: Current Market Dynamics - Most on-chain prediction markets use stablecoins to avoid volatility, which forces Bitcoin holders to convert their assets, leading to opportunity costs [2][3] - The author suggests treating BTC as a deflationary settlement asset, similar to gold, to allow users to benefit from long-term appreciation [3] Group 2: Liquidity Bootstrapping Strategies - The paper explores three methods to bootstrap liquidity in BTC-based markets: cross-market making, DeFi redirection of trades, and automated market makers (AMMs) [3] - Each method is analyzed for its risk profiles, including exchange-rate swings and slippage, which impact users and liquidity providers [3] Group 3: Practical Applications of BTC Settlement - BTC settlement could be particularly beneficial for long-dated political events, allowing Bitcoin holders to maintain exposure while participating in prediction markets [4] - Crypto-native communities may prefer BTC settlement as it aligns with their belief in crypto as a value storage, avoiding the need to convert to stablecoins [4] - In regions with unstable fiat or regulatory issues surrounding stablecoins, BTC-settled markets could serve as a more reliable settlement asset [4] - Events with small payoff windows or during volatile periods may also benefit from BTC denomination, making it more relevant [4]

Core Insights - A new academic paper reveals that there is a consistent presence of "free money" on Polymarket, with traders capitalizing on mispriced markets [1] - The study analyzed data from April 2024 to April 2025, identifying thousands of instances of market price discrepancies [1][5] Market Inefficiencies - In certain markets, the prices of "Yes" and "No" shares did not sum to one dollar, creating risk-free profit opportunities for quick traders [2] - More subtle mispricing was observed in logically related markets, allowing savvy traders to lock in profits regardless of outcomes [3] Profit Potential - Researchers estimate that over $40 million in profits have been extracted from the system by arbitrageurs, indicating a viable business model [4] - The study identified more than 7,000 markets with measurable mispricing, highlighting the prevalence of these opportunities [5] Broader Implications - The findings raise questions about whether these inefficiencies are unique to Polymarket or indicative of prediction markets as a whole [5] - Continuous peer-to-peer trading platforms, whether on crypto or regulated venues, are subject to similar structural inefficiencies [6] Market Dynamics - In traditional finance, inefficiencies are quickly arbitraged away by algorithmic market-makers, a trend now seen in prediction markets as well [7] - Sophisticated traders, often using bots, monitor multiple markets to exploit inconsistencies, which helps realign prices after they take their profits [7]

Core Insights - Chainlink's price reached approximately $25 on September 13, marking a 15% increase over the week, driven by Polymarket's adoption of Chainlink's data feeds for price-related wagers [1] - The integration allows for secure, real-time prediction markets across numerous crypto trading pairs, reducing reliance on social voting and mitigating resolution risks [2] - Sergey Nazarov, Co-Founder of Chainlink, emphasized that the integration enhances the reliability of prediction markets by utilizing high-quality data and tamper-proof computation [3] Integration and Market Impact - The partnership enables low-latency, verifiable price reports and automated on-chain settlement, providing Polymarket with near-instantaneous resolution capabilities for deterministic outcomes like Bitcoin and Ethereum price predictions [4] - Chainlink's open interest in derivatives is reported at $1.7 billion, with a slight decrease of 0.02% intraday, while trading volumes increased by 7.3%, indicating speculative activity focused on trimming LINK futures positions [5] Technical Analysis - The daily price chart for Chainlink shows a 15.9% rally over six sessions, bouncing from a support level of $22 to peaks around $25, with a Golden Cross signal formed at $24 [6] - A decisive close above $25 could target the next resistance level near $28, while failure to maintain above $24 may lead to a retest of the $23.30 support area, with further breakdown potentially targeting $20 [7]