alt Hacker NewsHow do prediction markets account for interest rates? I feel like I should be willing to pay no more than ~96 cents for a contract that will definitely resolve to a dollar in a year. Who puts up the other 4 cents?
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computerphage • yesterday at 5:22 PM
The usual thing is that the market ends up around $0.95 for things like that, if the actors are all solid investors. It only takes one overly enthusiastic yes buyer to break that ceiling, the smart money won't "correct" it down to $0.95
There's another idea, which is make contacts that pay out in shares of an ETF, but I haven't seen this idea put into practice
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samvimes • yesterday at 5:27 PM
Kalshi pays interest on open positions
Interest on open positions. Polymarket pays about 4.00% annualized holding rewards on eligible markets/positions (not all). Kalshi pays about 3.25% APY on cash plus open positions (collateral).
Edit to add that on non eligible markets your theory is correct, for example: https://polymarket.com/event/will-jesus-christ-return-before...