oracle3
# Oracle3 **Autonomous prediction market trading agent across Kalshi, Polymarket, and Solana.** [](https://github.com/YichengYang-Ethan/oracle3/actions) [](https://github.com/YichengYang-Ethan/oracle3/actions) [](https://github.com/YichengYang-Ethan/oracle3/actions) [](https://codecov.io/gh/YichengYang-Ethan/oracle3)  [](LICENSE) [](https://github.com/YichengYang-Ethan/oracle3/discussions) [](https://github.com/YichengYang-Ethan/oracle3/commits/main) [](https://yichengyang-ethan.github.io/oracle3/) [](https://doi.org/10.5281/zenodo.20062548) ## Why this exists Prediction markets price binary contracts at systematically biased levels — a true 50/50 contract typically trades around **0.57** (favorite-longshot bias, $\hat{\lambda} \approx 0.183$). Most trading bots ignore this distortion entirely. Oracle3 operationalizes a peer-reviewed pricing model, calibrated on **291,309 resolved contracts** across six venues, to systematically harvest the bias through arbitrage detection and Kelly-sized model trades. This system deploys the exact $\lambda$ estimates and covariate model from [prediction-market-pricing](https://github.com/YichengYang-Ethan/prediction-market-pricing) (Yang, 2026) as its real-time pricing engine. ## How oracle3 differs from existing prediction-market tools | | Oracle3 | polymarket-whales | prediction-market-maker | py-clob-client | |---|---------|-------------------|-------------------------|----------------| | Pricing model | Wang Transform (calibrated MLE) | None | Bid-ask MM | None | | Constraint-based arbitrage | 8 strategies | None | None | N/A | | Multi-venue | Kalshi + Polymarket + Solana | Polymarket only | Polymarket only | Polymarket only | | On-chain execution | Solana via DFlow + Jito | No | No | N/A (SDK) | | Working paper | Yang (2026), SSRN | No | No | No | | Tests | 633 | 0 | 0 | 50+ | | License | Apache 2.0 | MIT | MIT | MIT | ## Architecture ```mermaid graph TD A[Wang Transform Pricing Engine<br/>MLE coefficients from paper] --> B[Fair Value Estimator<br/>Model Greeks · Kelly Sizing] B --> C[Strategy Layer] C --> D[8 Constraint-Based Arbitrage] C --> E[2 Model-Driven Strategies] C --> F[LLM Agent Strategies] D --> G[Trading Engine<br/>SpreadExecutor · Risk Manager · Position Tracker] E --> G F --> G G --> H[Kalshi] G --> I[Polymarket] G --> J[Solana / DFlow] ``` ## Strategies **Constraint-based arbitrage** — each exploits a violated probability axiom: | Strategy | Invariant | |----------|-----------| | Cross-Market | Same event, same price across exchanges | | Exclusivity | $P(A) + P(B) \leq 1$ for mutually exclusive events | | Implication | $P(A) \leq P(B)$ when A implies B | | Conditional | $P(A \mid B) \in [L, U]$ within derived bounds | | Event Sum | $\sum P(\text{outcome}_i) = 1$ within an event | | Structural | $P(A) = \beta \cdot P(B) + \alpha$ from calibrated model | **Statistical arbitrage**: cointegration spread (self-calibrating z-score), lead-lag (cross-correlation). **Model-driven**: fair value divergence (Wang-model edge), premium decay (rides predictable premium lifecycle). ## Pricing Engine Deploys the Wang Transform from Yang (2026), calibrated on 291,309 contracts across 6 platforms: $$p^{\text{mkt}} = \Phi\bigl(\Phi^{-1}(p^*) + \lambda\bigr), \quad \hat{\lambda} = 0.183 \; (p < 10^{-15})$$ - **Hierarchical model**: $\lambda_i = 0.259 - 0.072 \ln(1+V) + 0.143 \ln(1+D) - 0.477 |p-0.5|$ - **Model Greeks**: $\partial p / \partial \lambda$, Kelly fraction, edge decay rate - **Online calibrator**: hybrid batch MLE + streaming EWMA with category shrinkage - **Correlation-aware risk**: EWMA correlation matrix, effective exposure limits > Yang, Y. (2026). *Pricing Prediction Markets: Risk Premiums, Incomplete Markets, and a Decomposition Framework.* Working Paper, UIUC. [[Replication package]](https://github.com/YichengYang-Ethan/prediction-market-pricing) ## Quick Start ```bash git clone https://github.com/YichengYang-Ethan/oracle3.git && cd oracle3 poetry install oracle3 market list --exchange polymarket --limit 10 oracle3 dashboard --exchange solana --initial-capital 10000 ``` See [docs](https://yichengyang-ethan.github.io/oracle3/) for full CLI reference. ## Key Technical Choices - **Event-driven async engine** with snapshot persistence and Unix socket control (pause/resume/killswitch) - **SpreadExecutor** with automatic LIFO unwind on partial fills — no naked multi-leg positions - **Dual-layer risk**: local position/drawdown/exposure limits + Solana `simulateTransaction` pre-flight - **On-chain audit trail** via Solana Memo program; Jito bundle submission for MEV protection - **633 tests**, ruff, mypy, codespell CI on every push ## Star History [](https://star-history.com/#YichengYang-Ethan/oracle3&Date) ## Contributors [](https://github.com/YichengYang-Ethan/oracle3/graphs/contributors) If oracle3 helps your research or trading, please ⭐ star the repo — it helps others find it. ## License Apache 2.0 — see [LICENSE](LICENSE) for details. *This software is for research and educational purposes. Trading involves financial risk.*