Tuesday, May 12th, 2026
10:00am – 10:50am
Stratton Hall 202
Speaker: Renjie Shao, Florida State University
Title: Polymarket: Structure and arbitrage opportunities
Abstract: Polymarket is a decentralized prediction market where people bet USDC on the of real-world events. Legally classified in the US as a derivatives exchange for binary event contracts. This talk explores the structural and mathematical foundations of Polymarket. We will first examine the platform's hybrid architecture, which pairs an off-chain Central Limit Order Book (CLOB) for zero-latency matching with on-chain Polygon smart contracts for atomic settlement. We will also detail the game-theoretic mechanics of the UMA Optimistic Oracle used for market resolution.
The second half of the talks investigates the mathematics of arbitrage within Polymarket's multi-condition markets. Because market conditions are often correlated rather than independent, inefficiencies arise. By defining valid payoff vectors to form a marginal polytope, we demonstrate that arbitrage detection is fundamentally a constraint satisfaction problem. Rather than using brute-force calculation, we will discuss how to exploit these arbitrage-free boundaries using optimization techniques.