Ethereum co-founder Vitalik Buterin told PolyMarket last year that he created a $70,000 trading prediction market not by chasing hot stories but by fading what he called collective “madness.” The Ethereum co-founder frames returns as a function of behavioral reflexes in a market that is thin and prone to exaggeration, and the conversation brought to the surface a separate concern: oracle vulnerabilities in real-world event settlements.
Here’s How Ethereum’s Buterin Earned $70,000
In an interview published by Foresight News reporter Joe Zhou on “Yes, I made $70,000 at Polymarket last year.” Buterin answered: When pressed about scale, he said his initial investment was $440,000, implying returns in the mid-teens, a sharp contrast to the more typical retail experience that is truncated by headline-driven odds swings.
Buterin described his playbook as opportunistic mean-reversion on emotions rather than predictions. “My method is simple: look for markets that are in ‘insanity mode’ and then bet that ‘insanity will not happen,’” he said.
“For example, there are markets betting on whether Trump will win the Nobel Peace Prize. Or, during a period of severe panic, some markets predict that the dollar will go to zero next year. When market sentiment goes into this irrational ‘madness mode’, I bet against the opposite and this usually makes money.”
When asked where Zhou focuses on polymarkets (cryptocurrency, politics, entertainment and economics), Buterin said his interests are focused on politics and technology, reiterating that in his view, the edge comes from areas where participants are “obsessed with craziness and irrationality.”
The more important part of the thread moved from transaction style to payment integrity. Referring to online conversations about Venezuela-related markets, Zhou raised issues of information asymmetry and “prior knowledge” and asked Buterin if he had seen similar dynamics. Buterin offered his answer to the Oracle vulnerability by citing wartime contracts whose outcomes depend on narrow operational definitions.
He described the market for the war in Ukraine as determined by whether Russia “controlled certain cities.” Here, the smart contract defined “control” as control over the city’s most important train station. He said the oracle source is anchored in Institute for the Study of War (ISW) tweets and maps.
Then the failure mode occurred. “The ISW employee probably hacked his company’s systems, either accidentally or on purpose, when the map suddenly updated to show that the Russian military was in control of the train station,” Buterin said. “This caused something that everyone thought was a 5% chance (nearly impossible) to instantly become 100% in prediction markets. Even though ISW withdrew the update the next day, the money may have already been paid out.”
Buterin’s lesson is not only that prediction markets can be wrong, but that the data supply chains they outsource can be vulnerable in ways that cryptocurrency participants systematically underestimate. “This exposes a big problem: the security standards of current Oracle data sources (e.g. Web2 news websites and Twitter) are too low,” he said. “They never imagined that a single message they posted would determine ownership of $1 million on the blockchain.”
When asked how to solve the oracle problem, Buterin suggested two broad approaches: The first is a centralized trust model that effectively appoints authoritative publishers like Bloomberg. The second is token voting, a decentralized mechanism he associated with UMA. Buterin said trust in UMA was declining due to perceived game-theoretic weaknesses. If a coalition of whales can dominate the vote, the small number of “truth” voters could be punished economically and pressure participants to reflect power rather than reality.
At press time, Ethereum was trading at $3,010.
Featured image created with DALL.E, chart from TradingView.com
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