I'm confused by this market. Does this expect 0 inflation?

@Lorenzo yes, it’s an incongruous concept. Even in the title it says “current” but (permanent). The presumed goal is to track the current market cap, but since it won’t ever resolve to that number, only way to cash out is by selling a fraction of your investment to bring back the price excess, if any. So just buy low and sell high, I guess.

@deagol Shouldn't I buy at something like the expected price in ~1 year? So let's say 5% above the current market cap, and sell next year at a profit? That's even ignoring volatility 🤔

@Lorenzo the thing is when you buy today, even a small amount, you drive up the price a bit, And when you try to sell next year, if you were right and the underlying did 5%, you won’t be able to collect 5% as your sale will lower the price another bit. So, buy the dips and sell the excesses.

you won’t be able to collect 5% as your sale will lower the price another bit

You can just put a limit order at (current_market_cap - 1)

@Lorenzo correct, so if that’s the fair price next year, why would it be 1.05*(current_market_cap) now?

@deagol Because if it was lower, you could make money by buying, since money frozen here gives you 4% daily, and there's option value because of volatility (you can make money if at any point it goes above 1.05*current)

@Lorenzo you don’t actually make 4% daily, that’s loaned and you pay it all back when you cash out. Volatilty cuts you both ways, you gotta be able to tell when a dip is a temporary deviation and not a longer term trend. If you pay a 5% premium on this market, and the underlying matches inflation and does 5%, you must find buyers to take your shares at same 5% premium or else your profit is zero. You are assuming everyone would agree with you the fair price is at a 5% premium. That’s circular logic and most likely doesn’t hold.

@NiciusB hey Nuno I think the bot is broken it’s correcting to wrong values of the market cap and not just this market. Just a heads up.

Can you be more specific about what you mean by “Long-running but theoretically can be resolved at any time”? Does long-running mean an expectation of months, years, or decades? Is there a random process, such as a Bernoulli trial or poisson process to determine if/when it resolves, based on some fixed probability distribution?

I hope they can be permanent. The threat is only there so people trade the market as intended and it doesn't becomes just another whale market where the actual question is irrelevant

@PatMyron I guess to me, for the threat to be credible, there would have to exist a random process to resolve (even if at a very low probability). Or maybe the existence of at least a few verifiable occurrences of the event in question (resolution). Otherwise I’m not convinced the market can actually track what’s intended to.

Added to my bio that I'll send mana to whoever who set up bots trading my permanent markets. Once there are multiple bots trading, they should make more sense