How to Earn Profits

Overview

YC365 offers multiple pathways for users to generate profits from prediction market trading. Understanding these different profit mechanisms is essential for developing successful trading strategies and maximizing your returns on the platform.

Two Primary Profit Sources

1. Market Trading (投注后在市场出售投注凭证)

Trade your prediction tokens (YES/NO tokens) on the secondary market before event resolution to capture price movements and market inefficiencies.

2. Event Settlement (等待最终结算)

Hold your tokens until event resolution to receive payouts based on the actual outcome of the predicted event.

Method 1: Market Trading Profits

How Market Trading Works

Token Trading Concept

YES/NO Tokens: Each prediction creates tradeable YES and NO tokens
Price Fluctuation: Token prices change based on market sentiment and new information
Buy Low, Sell High: Profit from price differences between purchase and sale
No Event Wait: Realize profits without waiting for event resolution

Market Dynamics

Real-time Pricing: Prices update continuously based on supply and demand
Market Sentiment: News and events affect token prices
Liquidity: Active trading provides liquidity for entering and exiting positions
Price Discovery: Market efficiently incorporates new information into prices

Trading Strategies for Market Profits

Short-term Trading (Day Trading)

Quick Profits: Capture small price movements throughout the day
News-based Trading: Trade on breaking news and announcements
Technical Analysis: Use price patterns and charts for trading decisions
High Frequency: Multiple trades to accumulate small profits

Swing Trading

Medium-term Holds: Hold positions for days to weeks
Trend Following: Follow sustained price trends
Event-driven: Trade around scheduled announcements or milestones
Position Sizing: Larger positions for sustained moves

Arbitrage Trading

Price Differences: Exploit price differences between related markets
Cross-market: Trade between different prediction markets
Statistical Arbitrage: Use statistical models to identify opportunities
Risk-free Profits: Low-risk profit opportunities

Market Trading Examples

Example 1: News-based Trading

Scenario: Sports prediction market for football championship

Setup: - Event: "Team A will win the championship" - Initial YES token price: 0.45 USDT - Purchase: 1,000 YES tokens for 450 USDT

News Impact: - Team A's star player returns from injury - Market reacts positively to news - YES token price rises to 0.65 USDT

Profit Realization: - Sell 1,000 YES tokens at 0.65 USDT = 650 USDT - Trading fees: 650 × 0.0015 = 0.975 USDT - Gas fees: ~0.02 USDT - Net Profit: 650 - 450 - 0.975 - 0.02 = 198.005 USDT - Return: 44% profit in short time

Example 2: Volatility Trading

Scenario: Political prediction market

Setup: - Event: "Candidate X will win election" - YES token price range: 0.35 - 0.75 USDT - Strategy: Buy low, sell high on volatility

Trading Sequence: 1. Buy: 500 YES tokens at 0.35 USDT = 175 USDT 2. Sell: 500 YES tokens at 0.70 USDT = 350 USDT 3. Profit: 350 - 175 - fees = ~174 USDT (99% return)

Example 3: Contrarian Trading

Scenario: Economic prediction market

Setup: - Event: "GDP growth will exceed 3%" - Market overreacts to negative news - YES token price drops from 0.60 to 0.30 USDT

Strategy: - Analyze fundamentals suggest price drop is excessive - Buy 2,000 YES tokens at 0.30 USDT = 600 USDT - Wait for market correction - Sell at 0.50 USDT = 1,000 USDT - Profit: ~400 USDT (67% return)

Market Trading Advantages

Flexibility

No Wait Time: Don't need to wait for event resolution
Quick Profits: Realize profits immediately
Multiple Opportunities: Trade multiple events simultaneously
Position Management: Adjust positions based on new information

Liquidity Benefits

Easy Exit: Exit positions when needed
Portfolio Management: Rebalance portfolio dynamically
Risk Control: Cut losses quickly if needed
Capital Efficiency: Redeploy capital to new opportunities

Market Trading Risks

Price Risk

Volatility: High price volatility can lead to losses
Market Timing: Poor timing can result in buying high, selling low
Liquidity Risk: May not be able to exit at desired price
Slippage: Large orders may move market price against you

Information Risk

Market Efficiency: Markets may already incorporate available information
False Signals: Misleading information can cause poor trading decisions
Competition: Other traders may have better information or faster execution
Emotional Trading: Fear and greed can lead to poor decisions

Method 2: Event Settlement Profits

How Event Settlement Works

Settlement Process

Event Resolution: Wait for the actual event outcome
Token Valuation: Winning tokens worth 1 USDT, losing tokens worth 0 USDT
Automatic Payout: Smart contracts automatically distribute winnings
Final Settlement: No further trading after resolution

Outcome Scenarios

Correct Prediction: Your tokens become worth 1 USDT each
Incorrect Prediction: Your tokens become worthless (0 USDT)
Binary Outcome: Clear win/lose scenario with no partial payouts
Immediate Settlement: Funds available immediately after resolution

Settlement-based Strategies

Value Investing

Fundamental Analysis: Analyze the actual probability of events
Market Inefficiency: Find markets where price doesn't reflect true odds
Long-term Positions: Hold positions until resolution
Patient Capital: Wait for events to unfold naturally

Probability Assessment

Statistical Analysis: Use statistics to assess true probabilities
Historical Data: Analyze historical patterns and outcomes
Expert Analysis: Leverage domain expertise for predictions
Model-based: Use mathematical models for probability estimation

Diversified Betting

Portfolio Approach: Spread bets across multiple events
Risk Spreading: Don't put all capital in single event
Expected Value: Focus on positive expected value bets
Risk Management: Balance high and low probability bets

Settlement Profit Examples

Example 1: Sports Outcome Betting

Scenario: World Cup final prediction

Analysis: - Event: "Team Brazil will win World Cup" - Market odds: YES tokens at 0.40 USDT - Your analysis: Brazil has 60% chance to win - Expected value: (0.60 × 1.00) - (0.40 × 1.00) = 0.20 USDT positive

Investment: - Purchase: 2,500 YES tokens at 0.40 USDT = 1,000 USDT - Trading fees: 1,000 × 0.0015 = 1.5 USDT - Total cost: 1,001.5 USDT

Outcome 1 - Brazil Wins: - Settlement: 2,500 tokens × 1.00 USDT = 2,500 USDT - Net Profit: 2,500 - 1,001.5 = 1,498.5 USDT (150% return)

Outcome 2 - Brazil Loses: - Settlement: 2,500 tokens × 0.00 USDT = 0 USDT - Net Loss: -1,001.5 USDT (100% loss)

Example 2: Economic Prediction

Scenario: Inflation rate prediction

Setup: - Event: "Inflation will exceed 5% this year" - Current market price: NO tokens at 0.25 USDT - Your analysis: Only 20% chance inflation exceeds 5% - Expected value for NO tokens: (0.80 × 1.00) - (0.25 × 1.00) = 0.55 USDT positive

Investment: - Purchase: 4,000 NO tokens at 0.25 USDT = 1,000 USDT - Trading fees: 1.5 USDT - Total cost: 1,001.5 USDT

Outcome - Inflation stays below 5%: - Settlement: 4,000 tokens × 1.00 USDT = 4,000 USDT - Net Profit: 4,000 - 1,001.5 = 2,998.5 USDT (300% return)

Example 3: Technology Prediction

Scenario: Product launch prediction

Setup: - Event: "Company X will launch Product Y by Q4" - Market assessment: 70% probability based on insider information - Current YES token price: 0.50 USDT - Expected value: (0.70 × 1.00) - (0.50 × 1.00) = 0.20 USDT positive

Investment Strategy: - Purchase: 1,500 YES tokens at 0.50 USDT = 750 USDT - Wait for Q4 resolution - If Correct: 1,500 USDT payout (100% return) - If Wrong: 0 USDT payout (100% loss)

Settlement Advantages

Potential for High Returns

100% Return Possible: Winning tokens always worth 1 USDT
Clear Outcomes: Binary win/lose with no ambiguity
No Market Risk: No worry about market price movements
Patient Capital Rewards: Rewards thorough analysis and patience

Fundamental Analysis

Deep Research: Rewards thorough event analysis
Expert Knowledge: Leverage domain expertise
Information Edge: Benefit from superior information or analysis
Long-term Value: Focus on actual probabilities, not market sentiment

Settlement Risks

Total Loss Risk

Binary Outcome: Either 100% gain or 100% loss
No Partial Recovery: Wrong predictions result in total loss
Time Risk: Capital tied up until event resolution
Opportunity Cost: Miss other trading opportunities while waiting

Event Risk

Unexpected Outcomes: Events may not unfold as expected
External Factors: Unforeseen circumstances can change outcomes
Information Changes: New information may invalidate original analysis
Resolution Delays: Events may be delayed or postponed

Combined Strategy: Hybrid Approach

Portfolio Allocation

Balanced Approach

40% Market Trading: Capture short-term price movements
60% Hold to Settlement: Benefit from fundamental analysis
Risk Diversification: Spread risk across strategies
Capital Efficiency: Optimize capital allocation

Dynamic Rebalancing

Market Conditions: Adjust allocation based on market volatility
Opportunity Assessment: Shift capital to best opportunities
Risk Management: Reduce exposure when markets are uncertain
Performance Monitoring: Track performance of each strategy

Tactical Combinations

Initial Position + Trading

Establish Core Position: Buy tokens based on fundamental analysis
Trade Around Core: Trade portions of position on price movements
Maintain Core Holdings: Keep some tokens for settlement
Profit Taking: Take profits on portions while maintaining exposure

Market Making Strategy

Provide Liquidity: Place both buy and sell orders
Earn Spreads: Profit from bid-ask spreads
Reduce Risk: Hedge positions while providing liquidity
Market Efficiency: Help maintain efficient price discovery

Risk Management for Profit Generation

Position Sizing

Kelly Criterion

Mathematical Approach: Use Kelly formula for optimal bet sizing
Risk-Reward Balance: Balance potential returns with risk of loss
Capital Preservation: Avoid oversized bets that can wipe out capital
Compound Growth: Optimize for long-term compound growth

Portfolio Limits

Maximum Position Size: Limit any single position to 5-10% of capital
Event Diversification: Spread bets across different events and categories
Time Diversification: Spread bets across different time horizons
Strategy Diversification: Use both trading and settlement strategies

Risk Controls

Stop-Loss Strategies

Market Trading: Set stop-losses for trading positions
Position Monitoring: Regularly review and adjust positions
Loss Limits: Set maximum acceptable losses per position
Capital Protection: Protect trading capital from major losses

Exposure Management

Correlation Risk: Avoid over-concentration in correlated events
Liquidity Risk: Ensure ability to exit positions when needed
Timing Risk: Manage risk of being wrong about timing
Information Risk: Account for possibility of being wrong about fundamentals

Performance Optimization

Strategy Selection

Market Analysis

Volatility Assessment: Choose strategy based on market volatility
Liquidity Analysis: Consider market liquidity for trading strategies
Time Horizon: Match strategy to available time horizon
Information Edge: Leverage areas of expertise or information advantage

Skill Development

Technical Analysis: Develop chart reading and technical analysis skills
Fundamental Analysis: Improve ability to assess event probabilities
Risk Management: Enhance risk management and position sizing skills
Market Psychology: Understand market sentiment and behavioral biases

Performance Tracking

Metrics Monitoring

Return on Investment (ROI): Track returns for each strategy
Win Rate: Monitor percentage of profitable trades/bets
Average Return: Calculate average return per trade/bet
Sharpe Ratio: Measure risk-adjusted returns

Strategy Evaluation

Strategy Performance: Compare performance of different approaches
Market Conditions: Analyze performance under different market conditions
Continuous Improvement: Identify areas for improvement
Learning from Mistakes: Analyze losing trades to improve future performance

Tax Considerations

Profit Classification

Trading Profits

Short-term Gains: Market trading profits may be treated as short-term gains
Frequent Trading: High frequency trading may be treated as business income
Professional Trading: Full-time trading may have different tax implications
Record Keeping: Maintain detailed records of all trading activities

Settlement Profits

Gambling vs Investment: Settlement profits may be classified differently
Long-term Holdings: Longer holding periods may qualify for different treatment
Jurisdiction Dependent: Tax treatment varies by country and jurisdiction
Professional Advice: Consult tax professionals for specific guidance

Documentation Requirements

Transaction Records: Maintain complete records of all transactions
Profit/Loss Calculations: Calculate and document all profits and losses
Fee Documentation: Track all fees and costs associated with trading
Annual Reporting: Prepare annual summaries for tax reporting purposes

Future Profit Opportunities

Platform Enhancements

New Markets

Market Expansion: More events and categories for trading
International Markets: Global events and opportunities
Specialized Markets: Niche markets for expert traders
Synthetic Markets: Algorithmically generated prediction markets

Advanced Features

Options Trading: Option-like derivatives on prediction tokens
Leveraged Trading: Margin trading for amplified returns
Social Trading: Follow and copy successful traders
Automated Trading: Algorithmic trading capabilities

Technology Integration

AI and Machine Learning

Predictive Models: AI-powered prediction models
Trading Algorithms: Automated trading strategies
Risk Assessment: AI-based risk assessment tools
Market Analysis: Machine learning market analysis

DeFi Integration

Yield Farming: Earn additional yields on token holdings
Liquidity Mining: Rewards for providing liquidity
Staking Rewards: Stake tokens for additional returns
Cross-platform Arbitrage: Arbitrage opportunities across DeFi protocols

For the latest information on profit generation strategies and opportunities, please check our official announcements.