A new application of the Adaptive Fully-Corrective Frank-Wolfe algorithm combined with Bregman Projection is optimizing arbitrage opportunities in prediction markets like Polymarket. These markets price event outcomes, such as election odds, and when prices misalign, arbitrage bots can exploit these discrepancies for risk-free profits.
The Frank-Wolfe algorithm iteratively selects optimal directions to adjust bets, similar to gradient descent but suitable for constrained environments, avoiding complex calculations. The fully-corrective aspect optimizes all previous steps in each iteration, accelerating convergence. The adaptive feature dynamically adjusts step sizes based on progress, enhancing speed. Bregman Projection intelligently projects bets back into valid spaces using market-appropriate distances, such as ensuring probabilities sum to one. This combination allows bots to efficiently compute optimal trades in large-scale markets, automatically extracting profits.
Advanced Algorithms Enhance Arbitrage in Prediction Markets
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