“traders are treating near-certain bets like zero-coupon bonds for a tiny yield”
FT Alphaville piece documenting the practice of 'bonding' in prediction markets: treating near-certain outcomes as synthetic zero-coupon bonds to earn a small but near-guaranteed yield. Uses the Polymarket 'Will Jesus Christ return' market as the central example, where betting 'No' at 96% odds implies a 4.76% yield to maturity. Notes that bonding trades face two key constraints: illiquidity (only $150k executable at one time) and catastrophic tail risk if the near-impossible outcome occurs.
No technical background needed
Platforms mentioned: Polymarket, Kalshi