“order books price binary events better than constant-product amms when liquidity is scarce”
Part 1 of a Ranger Global research series on onchain prediction market microstructure. Walks through why CLOBs beat constant-product AMMs for binary events, the YES/NO minting and merging invariant that lets depth expand whenever matched counterparties exist, and probability-scaled dynamic fees that shrink near 0 and 1. Closes with a regression of prediction market midpoints against BTC spot, finding PM traders systematically underreact to spot moves by 10-20% and that latency under 100ms now captures 73% of arbitrage profits.
Extensive technical background assumed
Platforms mentioned: Limitless