Hedging
In traditional prediction markets, odds can swing instantly without any real trading volume. Market makers constantly update their bids and asks to reflect new information, so prices can move sharply even if nobody actually bought or sold. This keeps markets “efficient,” but it leaves little room for speculators to profit off reacting faster than the market maker.
Melee flips this model. On Melee, odds are purely a function of volume. The odds are simply the ratio of total capital in all outcomes. That means prices only move when traders actually put money into the market.
This mechanic creates two big differences:
Speculative Edge in Volatile Moments In a traditional market, a last-second comeback sees the odds instantly swing because market makers update their bids. On Melee, that adjustment takes actual trading volume. If you’re early, you can size into the outcome surging in odds before anyone else and move the odds yourself, capturing the upside that normally goes to Market Makers.
Cross-Platform Hedging Because Melee odds move only with volume, they can temporarily diverge from orderbook-driven markets. This creates natural arbitrage:
Buy an outcome on Melee while it’s still underpriced.
Sell the same outcome on another platform where the odds have already shifted.
Lock in profit when the two converge.
Why It Matters
Melee = volume-driven → speculators get rewarded for being first with conviction.
Traditional = maker-driven → odds move instantly, leaving no opportunity to front-run new info.
Together = hedge opportunity → traders can exploit price dislocations between the two systems.
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