Vitalik Buterin's Prediction Strategy on Polymarket: Why a Conservative Approach Works

Vitalik Buterin recently shared his exciting experience in implementing strategies in the prediction market, especially on Polymarket. With an initial capital of $440,000, the Ethereum founder managed to earn a profit of $70,000 over the course of a year. According to Foresight News, this success was not the result of bold speculation, but rather through a measured approach based on in-depth research into the dynamics of the prediction market.

How Vitalik Made Millions from the Prediction Market

Buterin’s strategy has a unique philosophy: he looks for prediction market segments that are experiencing a ‘crazy mode’ or extreme volatility, then takes a position opposite to mainstream predictions. In other words, this strategy focuses on identifying moments when market sentiment is overly extreme, whether in politics, technology, or other areas on Polymarket.

This contrarian approach has proven effective because Vitalik doesn’t just follow trends, but analyzes the fundamentals of each event. He chooses to bet that ‘crazy things won’t really happen’—meaning he looks for opportunities where the market has over-hyped or under-hyped a certain outcome, creating profit gaps for more cautious traders.

Two Ways to Address Oracle Issues in the Prediction Market

Despite his trading success, Vitalik also raises concerns about technical challenges faced by prediction markets, especially oracle problems. He identifies that determining the final outcome of a prediction market requires a trustworthy source of information. To address this, he suggests two main solutions.

The first solution is a centralized model, where trust is placed in leading institutions or companies like Bloomberg to provide accurate data. This approach is quick and efficient, but carries the risk of a single point of failure and depends on the integrity of a single institution.

The second solution is a token-based voting mechanism, such as the one implemented by the UMA protocol. In this decentralized model, token holders participate in voting to determine the market outcome. However, Vitalik notes that trust in UMA has waned in recent times, indicating that this system also has vulnerabilities to manipulation or collective misjudgment.

Hopes for Future Oracle Solution Innovations

Vitalik expresses optimism that more robust oracle solutions will emerge in the future, capable of combining the advantages of both approaches—centralized efficiency with decentralized security. Oracle issues remain one of the critical technical barriers in developing more mature and reliable prediction markets. As technology continues to evolve, the possibility of creating more transparent and manipulation-resistant prediction mechanisms becomes increasingly open.