Reality Cards: Strategies and Tips
Reality Cards, as the world’s first outcome ownership market, is completely unlike every other prediction market. The strategies employed to maximize financial return on other prediction markets are unlikely to work within this new paradigm- rather, a whole new set of strategies are required.
The purpose of this article is to explore these new strategies.
In Reality Cards, users can rent the outcome Card (also an NFT) at any time, with the rental price going into the event’s total pot. At the end of the event, the pot is shared among all owners of the winning outcome, proportionate to how long each user held it. Crucially, each NFT itself is claimable by the user who held the Card the longest (regardless of whether or not it was the winning Card).
Strategy 1: (you have an opinion on the odds):
The strategy is this: if you think there is an X% chance for outcome Y to occur, it is in your interest to rent outcome Y if its rental price is less than X% * (avg. sum of all rental prices since the start of the event).
Event: What will the weather be like today in London?Outcomes: Sunny (10 DAI/day), Rainy (8 DAI/day), Cloudy (18 DAI/day)In this example, we’ll assume the rates have been the same since the event began 10 days ago, putting the pot at 360 DAI with an average sum of prices of 36 DAI (360 DAI/10 days).If you think there’s a 60% chance it will rain that day, you should rent the Rainy Card up to a price of 60% of 36 DAI, or 21.6 DAI/day. The current price is 8 DAI/day, therefore there is money on the table!
Strategy 2 (you have no opinion on the odds):
But what if you have absolutely no idea what the weather will be like today in London? It doesn’t matter! With this strategy, even if you have no idea what the odds for a specific outcome might be, you can still get involved: it’s always in your financial interest to rent every Card if their total combined price is lower than the average sum rental price of all Cards since the market began. In prediction market terminology, you are effectively buying a ‘complete set’ for less than previous users have paid.
Event: What will the weather be like today in London?Outcomes: Sunny (10 DAI/day), Rainy (8 DAI/day), Cloudy (18 DAI/day)In this example, we will assume that the pot is up to 360 DAI and that the event has been up for 2 days. This gives an average sum of prices of 180 DAI (360 DAI/2 days), however, the current sum of prices(10 DAI + 8 DAI + 18 DAI) is only 36 DAI/day.Therefore, you should rent all of the cards, and keep doing so, until the combined price of is equal to the average sum rental price of 180 DAI/day.
As of recently, we’ve also made it super easy for our users to find the average rental for an event without having to bust out their calculator, as we’ve listed it directly on the event page!
Also, it is worth noting that both of these strategies assume zero gas fees which is not currently possible on Ethereum mainnet, however, with our xDai launch this is less of an issue (if at all), as gas fees are generally less than a penny.
Hopefully these strategies help offer you an edge when it comes to participating in events on Reality Cards — and while these are some of our favorite strategies, don’t be afraid to share some of yours in our Discord server!
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