Is that election prediction platform planning to act as its own bookmaker? An internal market-making team is already recruiting.

Question

[Chain News] Recently, I heard some pretty explosive news—the prediction market platform that went viral during the US election is now planning to step in as a market maker themselves.

According to insiders, this platform is hiring on a large scale to form an internal market making team. They’ve already approached several professional traders, trying to recruit them for this new department. In short, this team might soon be directly taking the opposite side of bets against users on the platform.

This is actually a pretty subtle issue. Prediction markets rely on liquidity, and in theory, if the platform builds its own market making team, it could provide deeper markets and reduce slippage. But on the other hand, the platform would be both referee and player—a model that’s quite controversial in traditional finance.

When asked about this, the platform officially declined to comment. But judging from their hiring activity, the plan seems to be well underway. Now it’s just a matter of seeing whether regulators will have any opinions—after all, the compliance boundaries for prediction markets have always been pretty murky.

CryptoMom · Accepted Answer

Being both the referee and the player—I've seen this tactic many times before. It's bound to backfire sooner or later.

Layer2Observer · Answer

Wait, acting as both the referee and the player? How does this logic work on-chain, what about transparency?

This is the same trick that traditional finance has been criticized for all these years—does Web3 really need to repeat the same mistakes?

From a source code perspective, the trading data of the platform's market-making team should be traceable; the key is whether they're willing to make it public.

An interesting observation is—if they're still looking to expand after the election hype has died down, either they're really optimistic about this sector, or they're burning money to stay afloat. It depends on their funding situation.

Honestly, unresolved liquidity issues do trouble prediction markets, but using this approach? It's likely to backfire.

I really don't understand why they insist on market-making themselves. Isn't incentivizing market makers a better approach? Why take on such high risk?

Feels like it's only a matter of time before regulators take notice. Proactively exposing yourself isn’t much better than getting caught.

SandwichDetector · Answer

Another self-playing trick, huh? It sounds nice when you call it market making, but in reality, you're just trying to increase your win rate, right?

GmGmNoGn · Answer

Being both the referee and the dealer, that's quite a move.

UnluckyValidator · Answer

Acting as both the referee and the player—I’ve seen this trick too many times. Sooner or later, something’s going to go wrong.

TradFiRefugee · Answer

Isn't this just blatantly running a betting pool, merely disguised as market making?