Decentralized prediction market Polymarket has grabbed headlines with the US presidential election approaching, as both a way to gamble and a gauge of public opinion. However, it’s not the only crypto-based prediction market, and if you want to take leveraged long or short positions on the results of the election, then DeFi platforms dYdX and LogX have both introduced this kind of market.
The US election is almost here, and this time, decentralized prediction market Polymarket–which runs on crypto rails–has been grabbing headlines as a focal point for election speculation.
Polymarket isn’t the only crypto platform where you can bet on the election outcome though, as two decentralized exchanges–dYdX and LogX–have been offering leveraged prediction markets focused on the presidential race, so let’s go through how to leverage trade the election.
How Does a Leveraged Prediction Market Work?
When you trade on a prediction market, you’re buying and selling shares on an event outcome. So, let’s look at the election, and take Yes on Trump to win as an example.
When the election result is known, all Trump Yes shares will resolve to a value of $1 if Trump wins, or zero if he loses. But before the result is known, you can trade these shares and prices will fluctuate with expectations. That means you can buy shares and hold them until the results are in, or you can trade volatility just as you would with any other asset.
But from there, both dYdX and LogX have introduced leverage into the equation, and again, this works as with leverage on other assets, so if you bought $100 of Trump-to-win shares with 2X leverage, you’d control a $200 position, amplifying both gains and losses.
One point to note here is that while Polymarket–which doesn’t offer leverage trading–has a wide range of prediction markets available (and not only focused on politics) dYdX and LogX only offer prediction market trading on the election result.
Also, be aware that leverage trading carries the risk not only of increased losses, but also of liquidation.
How to Leverage Trade the Election Result on dYdX
On dYdX, you need to click on the Market tab, then click on Prediction Market below the search bar, and you’ll find TRUMPWIN, so go ahead and click on that. If you’re wondering why there isn’t a Harris market, there isn’t really a need–you can bet on Harris by opening a short on Trump.
You’ll need to connect up your wallet–supported wallets include MetaMask and Phantom–and make sure you have some USDC available. When connecting a wallet, you’ll then be prompted to click through and generate a dYdX Chain wallet (dYdX uses an app chain on Cosmos).
With that done, you can then click Deposit up at the top right of the console and transfer USDC across to your dYdX account, but be aware the deposit process can take a few minutes to process.
You’re then ready to trade, so if you think Trump is going to win (or simply that his odds of winning are going up) you can open a long. Remember, you can close it at a profit before the election outcome if the price goes up in the coming days, or if necessary, close early and cut losses if the price goes down.
And if you want to bet on Trump losing, or that the price on Trump winning will go down prior to the election, then you need to open…
