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MicrostructureResearch Paper

Unravelling the Probabilistic Forest: Arbitrage in Prediction Markets

Oriol Saguillo, Vahid Ghafouri, Lucianna Kiffer, Guillermo Suarez-Tangil·August 5, 2025·Academic Paper
arbitrageurs pocketed $40 million by exploiting pricing gaps across prediction markets

Why It's Worth Reading

Examines mispricing inefficiencies on Polymarket, identifying two categories of arbitrage opportunities: those within single markets and those spanning multiple related markets. Using blockchain transaction analysis, the researchers estimate approximately $40 million in profits were extracted through exploitation of these pricing inconsistencies.

Extensive technical background assumed

Concepts

Platforms mentioned: Polymarket

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