"There are no ordinary cats." -Colette Grab your coffee or boba. It's time to talk Augur and prediction markets. 🔥



Coronavirus vs. Prediction markets I shared a few thoughts yesterday on why prediction markets could make life harder for the next Coronavirus:









The Rise of Poyo & the Hottest Augur Startup You've Never Heard Of... Today, I'll share a peek inside what may be the fastest-growing but least known startup in Augurland right now. Few of you reading this even know it exists. This “startup” is the creation of Poyo, Augur’s notorious feline trader and self-christened “sof’ cat of predictions." I first stumbled across Poyo in 2016 when I sighted a whiskered avatar in the comment section of PredictIt. The prolific commenter liked to boast about its “sof’ and fluffy fur” when not discharging poorly spelled predictions. A bit strange, I thought. But then again, the Internet is full of strange. I mostly forgot about the mysterious feline speculator until the autumn of 2018, when I spotted him once again (for simplicity I'll refer to Poyo as a he), this time on Augur, creating scam markets that would resolve Invalid due to subtle gotchas.





Illustration by Sai Li This ploy plagued Augur for months and by the spring of 2019, it became an issue too big to ignore. At the time, I was working with the Forecast Foundation, and we developed market filters and sorts to protect traders from these markets. Once we released these changes in early June, it was no longer profitable to create Invalid markets. Poyo's stint as an Invalid scammer had run its course. The game was up, but for better or worse, the player had nine lives. It was time to decide what to do with the next. Around this time, I predicted that Poyo would, in time, convert from a “black hat cat” to a “white hat cat,” using his skills to do good rather than evil. Not because he would wake up one day with a fresh moral compass, but because it would become more profitable to do good than bad things on Augur. The incentives would align between what was good for individual market actors and the platform as a whole. I thought that the biggest opportunity was for Poyo to become an Augur Affiliate, or in his case, an “affilicat.” In v2, whenever you share a link to Augur, you collect affiliate fees anytime someone clicks on a link and ends up trading on any market. I figured that Poyo has one paw in the world of PredictIt and another paw in the world of Augur, so he could bridge the two, driving users into Augur and reap affiliate profit in the process. I told Poyo about how affiliates work in v2, and he quickly saw the potential. What’s now obvious in hindsight, is that Poyo’s path to affilicat prosperity wouldn’t be through technical means like creating improved onboarding UXs, like I had originally thought. It would be social. For a cat, poyo is highly social. He has over 40 thousand Disqus comments, though many of them look like this:



Just as Poyo’s fluffy avatar, juvenile spelling - In Poyo-speak, “I do not feel that I need to Tweet this thought” is “I donut fell that I nedd to twet this tot” - and inane commentary on being a sof’ cat can belie his capability for evil, they can also conceal his competence. Once Poyo decides on a plan, whether it’s creating Invalid markets, market making on PredictIt, or creating a social network around prediction markets...he is a machine. So I knew something was up when Poyo launched a venue to discuss prediction markets and PredictIt, in the form of a Discord server, in late 2019. In just a few months, it has ballooned to over 1400 users with dozens of active channels. Poyo's Discord is a blend of casual chat and more serious commentary and features channels on election and prediction market-related topics, including temporary chats around live events like debates and state primaries. It also integrates data on PI odds and poll releases.



From the #polling channel

The Discord has the potential to become a go-to venue for traders around the world to talk about political trading. Prediction markets, especially ones around politics, are social creatures. PredictIt's Democratic Nomination market for example, has over one million comments. I expect we will see a flourishing of social products built around Augur in the next few years. Poyo's Discord could drive many PredictIt users to Augur. PredictIt traders face low limits and high fees, two issues that Augur obliterates. PredictIt may remain a superior venue for casual, low-stakes traders for some time, but Augur could become the no-brainer for high-stakes traders after v2 launches. The Discord is also promising from a business stance. If Augur takes off, Poyo can turn it into a prosperous affiliate stream, automatically converting any links to Augur posted on the discord to include his affiliate address. Poyo may find other ways too, to leverage this fast-growing social community around Augur or PredictIt. An early hint of Poyo's leverage is how he partnered with Guesser around Super Tuesday. Poyo's Discord featured prediction contests sponsored by Guesser while guesser.com pointed users to the Discord as its companion social app. I suspect that this is just the start. Poyo is building relationships with other folks building on Augur, and this may lead to some lucrative partnerships. Poyo has done some bad things that I do not condone. But it would be a mistake to shrug aside the sof’ cat. Invalid markets was only Poyo’s first act on Augur. His second act may be much better, and much bigger...

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PredictIt Trading Super Tuesday was a mixed bag. I made some nice returns on my Biden longs but gave much of it back to the market with my Bloomy positions. I don't at all buy the story, by the way, that Bloomberg's collapse proves that "money can't buy elections." He had staged a remarkable rise in polls, since entering the race, and had it not been for his anemic debate showing and Biden's South Carolina surge, I think he'd still be in the race and leading the pack. That said, a bad trade is a bad trade, and markets don't care about about counterfactuals. Moving forward... Biden is on pace for another strong night for "Mini Tuesday." If Bernie doesn't drop out by Thursday morning and Sunday's debate hasn't been cancelled due to Corona concerns, I'll probably buy NO shares for Biden DemNom. I'm guessing by then, such shares would be around 5 cents. My reasoning is two-fold: 1) Dems haven't seen Biden yet on a *small* debate stage where he has to do much or most of the talking and is the sole focus of attack. I believe the smallest debate yet has been 6 people. The next would be 2, with all eyes on Biden. Even in the crowded debates, he has often fared less well in the second half, possibly due to exhaustion. This issue could amplify with just one rival, Bernie, who happens to be a sharp debater. 2) I see more than usual "tail risk" around Corona potentially shaking up the campaign. Also, bear in mind that no Democratic candidate has ever won the nomination without winning either Iowa or New Hampshire, except Bill Clinton, in 1992, who got 2nd in New Hampshire - Biden got 5th. Biden is no doubt the heavy favorite to win the nomination at this point, but if NO is trading under 5 cents or so by Thursday, I don't think I'll be able to resist a short position.



Friendly reminder: this isn't trading advice, just a look at what I'm up to. I probably have no idea what I'm talking about here.



Say Hi Thanks for reading, guys. Feel free to say hi with any thoughts or questions, and I hope you have a wonderful rest of the week. Happy predicting,

Ben