“prediction markets break when you need to price more than two outcomes at once”
Uses the March 2026 Strait of Hormuz crisis to argue that binary order-book prediction markets hit an architectural ceiling when pricing granular, multi-outcome risk. Compares how traditional options solve this for tradable assets, then explains how automated market scoring rules (LMSR/CLMSR) offer protocol-native liquidity, coherent pricing, and capital efficiency for events without underlying assets. Walks through a concrete WTI crude oil scenario showing how scoring-rule markets reward precise thesis expression over simple directional bets.
Some technical background helpful
Platforms mentioned: Polymarket, NEW: Tide Markets