Predyx BuddyPredyx Buddy

https://ekung.io/predyx-buddy

This was just a little side project to help people make smarter bets on Predyx.

Enter your beliefs on what the correct probabilities should be, and the tool will tell you the optimal betting strategy. There's also a slider for how conservative you want to be. I predict there to be some fairly good opportunities for strategic bets, especially in multi-outcome markets where the optimal strategy is harder to think through.

Consider this a Christmas gift to all stackers! But if you benefit from this tool, I'd appreciate any thanks in the form of sats, as well as feedback for improving the tool.

Hope this helps! Happy predicting!

The Math Behind PredyxThe Math Behind Predyx

Predyx uses a "logarithmic market scoring rule", basically, a pricing algorithm. When you buy or sell shares on Predyx, you are not buying or selling shares from another market participant, you are buying and selling shares from the platform. Here is the explanation in their own words, with a focus on helping market creators. My tool is meant to help market participants, not creators.

Let there be $N$ outcomes, and let $x_i$ be the current number of outstanding shares for outcome $i$.

The LMSR rule says that the current probability (and therefore share price) of outcome $i$ is:

where $b$ is the "market liquidity" parameter, something set up by the market creator which influences how much sats are available in the market to earn. (Higher liquidity means the market is harder to shift but there's more potential earnings for each trade; lower liquidity means the market is easy to shift but there's less potential earnings for each trade.)

Note that the market creator also "seeds" the market with a number of initial phantom shares that you won't see in the order history, but serve to set the initial probabilities of the market.

The nice thing about this formula is that there is an easy rule to tell you how many shares of each outcome to purchase/sell in order to shift the probabilities towards what you think are more accurate:

Optimal betting strategyOptimal betting strategy

Let $p_i$ indicate the current market probabilities, and let $p_i^{\prime }$ be your target probabilities (the probabilities that you believe more accurately reflect reality). Choose one outcome to hold fixed (that is, to not buy or sell any shares). For simplicity, let's call that outcome 1. Then, for every other share, the optimal rule for buying is:

If you believe that outcome $i$ is more likely than the current probabilities indicate, you'll buy more of outcome $i$. If you believe that outcome $i$ is less likely than current probabilities, you'll sell more of outcome $I$.

The strategy can also be adjusted so that it can be implemented with only buys. You simply add a constant to all $\Delta x_i$ until none of them are negative (sales) and all of them are positive (buys). Since shifting all shares by a constant amount doesn't change the target probabilities, this results in the same expected profit from the trade.

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