What happens if Trump loses the election?

Zhouzhou

24-11-04 10:53

Read this article in 9 Minutes

Original title: Polymarket | What will happen if Trump loses the election ?
Original author: zaddycoin, founder of Shoal Research
Original translation: zhouzhou, BlockBeats

Editor's note:This article explores the complications and arbitrage opportunities that the Polymarket platform may face if Trump loses the election. The article assumes that the market may enter a "double dispute" phase after AP, Foxnews, and NBCNews announce Trump's defeat. The author believes that arbitrage opportunities will arise during the dispute, and points out that if Foxnews does not announce the election results, it may make the situation more confusing. The article reminds that this is a hypothetical discussion and looks forward to insights from industry insiders.

The following is the original content (the original content has been reorganized for easier reading and understanding):

If Trump loses the election according to the market rules, it means that there will be reports from AP, Foxnews and NBCNews confirming that he lost the election. I am betting that Polymarket's US presidential election market will experience a complete "double dispute", and retail investors may get hurt in the process of chasing 100x bets because they expect the market results to reverse.

In other words, if the US presidential election market ends with Trump losing, the market will experience two disputes, and retail traders will try to make risky bets in the hope that the market may overturn the dispute. You are not Tom Brady...

If Trump loses the election, TRUMPYES holders will definitely not admit defeat easily, especially compared to HARRISYES holders. However, rules are rules, and @Polymarket reminds you what the consequences will be if this happens.

Market Rules:

Dispute Mechanism

Anyone can dispute the outcome within approximately one day after the market is resolved, by staking only $750 on the UMAprotocol. This is a drop in the bucket for the liquidity on the platform, and traders can dispute up to two times before the market is finally resolved.

Here is an example of a "double dispute" that was overturned (these examples are just to show what a disputed market looks like).

Rules and Arbitrage Opportunities

According to the rules: All news organizations must confirm the election results. Based on Polymarket's past dispute precedent (i.e., the results of previous disputed markets), I predict that the market will enter a "double dispute" phase and that the largest holders of UMA tokens (UMA voters) will ultimately determine the result as "Trump lost the election."

False Arbitrage Opportunities

During the dispute period, I expect some arbitrage opportunities to emerge as some holders try to take advantage of the possibility of a market reversal and pursue 100x returns (betting TRUMPYES at 1% odds will get 100x returns if the result reverses).

During the dispute period, the market may start pricing in TRUMPYES - 1%, TRUMPNO - 99%, and as aggressive deposits are injected, the price gap may widen further (forming arbitrage opportunities).

These prediction markets are gambling machines... people will say "there is a 100x chance, why not bet a little", while some people are more confident to invest a lot of money. The result may make people "hurt"... I will not bet on 100x, but prefer to bet on 99% odds because it should end with "Trump loses the election" after the dispute period.

Note: There may also be a situation where arbitrage opportunities remain narrow because "100x bettors" cannot drive market prices alone.

A recent "RFK will exit on Friday" market saw YES fall to 96% during the post-resolution dispute period. Senior players (OGs) who are familiar with the Polymarket dispute mechanism have gained a 6% arbitrage opportunity, which is one of the connotations of market rules.

Timing judgment and prediction premise

The premise for my prediction to be realized is that AP, Foxnews and NBCNews all announce that Trump has lost the election.

If this happens, the situation will become extremely interesting. If FoxNews chooses not to announce the election results to support Trump's position, things will become quite complicated. I'm not sure if there is a similar precedent in the past. But if this happens, it will be really "wonderful".

Sympathy and What-If Analysis for Polymarket

I sympathize with Polymarket because if any of these what-if scenarios were to play out, things could get very (cannot be stressed enough) messy and a lot of money would be affected. Again, this is just hypothetical thinking based on multiple variables, intended to provoke thought, so take it in that light.

Let the game begin