Polymarket is a decentralized binary prediction market built on Polygon, where users can use USDC to place bets on any future events that have not yet occurred, including topics in business, politics, pop culture, sports, and more.
After the outcome of the event is determined, the losing side will lose all their bets, which serve as a reward for the correct side. However, before the dust settles on the results, bettors may change their minds, so Polymarket also provides a trading market that allows users to freely trade their prediction outcomes. The betting ratios of both sides reflect the probability of the event occurring.
Embracing the philosophy of "Put your money where your mouth is," Polymarket encourages users to provide insights close to the facts through economic incentives, presenting an immediate and neutral prediction outcome.
The odds trends of Trump, Biden, and Harris on Polymarket.
Polymarket is a prediction market website that allows users to bet on outcomes. According to data from blockchain analytics platform Dune Analytics, the site's monthly active trading users surged from 13,000 in May 2024 to 220,000 in October.
On this website, topics of interest are designed as "yes or no" questions. For example, "Will Trump win the 2024 U.S. presidential election?", "Will Musk's tweets from November 1 to 8 be fewer than 250?", or "Will 'Inside Out 2' become the highest-grossing movie of 2024?". When betting, there needs to be another user on the opposite side—some support, some oppose, and the transaction is completed.
The price of the "bet" is reflected in the odds, i.e., the amount a bettor needs to wager to win 1 dollar, such as an odds of 65%, indicating that users need to bet 0.65 dollars. It also represents the probability of that outcome occurring, because only if a user believes the probability of the outcome is higher than 65% will they be willing to pay 0.65 dollars.
This activity is not a new thing, more widely known are traditional gambling (lotteries, slot machines, etc.) and sports betting (football, basketball, horse racing, etc.). Today, many gambling websites allow gamblers to bet on various events, from who will win the Super Bowl to whether aliens exist.
Polymarket is a similar platform, but it is not called a casino or gambling site, but a "prediction market". The main difference is that the former has more entertainment attributes, and the results are random; the latter can generate additional information value, and participants can profit in the long term based on cognition. Political prediction markets can be traced back to at least the 16th century when there were records of betting on the next Pope.
Moreover, Polymarket operates differently from ordinary gambling websites; it is "decentralized"—the odds of events are not determined by a specific person or organization but are cast by users.
In 2020, then 22-year-old American Shayne Coplan founded Polymarket and now manages a team of about 30 people. Coplan grew up in New York and studied computer science at New York University before dropping out to devote himself to his increasingly obsessed field—cryptocurrencies and prediction markets. When Ethereum was launched in 2014, just after his 16th birthday, Coplan became a follower and began deeply participating in blockchain projects two years later.
Coplan, with his exceptional talent in the field of cryptocurrencies, got his entrepreneurial inspiration from Hayek, Robin Hanson, and others. Hayek emphasized "decentralization" and "price signal" theory, pointing out in his famous paper "The Use of Knowledge in Society" that a decentralized price mechanism not intentionally designed by humans could maximize the role of knowledge in society.
Hanson directly created a word, Futarchy (a combination of Future and the suffix -archy, meaning future government), referring to a form of government that governs by betting. He believes that while voters vote on values, they should also bet on beliefs, essentially "put your money where your mouth is."
The inherently decentralized nature of blockchain, combined with the market theories of the two scholars, led to the birth of Polymarket during the turbulent pandemic period.
Compared to traditional gambling websites, blockchain technology enhances the transparency and accessibility of market information. All transactions on Polymarket are public, each transaction is recorded and traceable. Currently, users can only use a cryptocurrency called USDC (USD Coin) to bet on Polymarket, which is a virtual currency pegged to the price of the dollar, also known as a stablecoin, unlike Bitcoin, which has large price fluctuations.
Moreover, this form of payment also enables global access. It should be noted that Polymarket is not accessible in the United States, although many Americans use VPNs to circumvent the ban. In 2022, it was deemed illegal by the U.S. Commodity Futures Trading Commission (CFTC).
Silicon Valley venture capitalist Peter Thiel and Ethereum founder Vitalik Buterin have both invested in Coplan. In May of this year, Polymarket announced that it had raised $70 million through two rounds of funding.
The principle of making money is simple: if the event eventually occurs, users will receive a return of 1 dollar for every 0.65 dollars invested; if it does not occur, the money is lost. Of course, users can also sell their "shares" before the final result comes out, earning from the price fluctuations.
But Polymarket is not the first decentralized betting platform; similar ones include Augur and Gnosis. Augur was the first prediction market on Ethereum, but due to poor user experience, it failed to gain broad market attention, and Gnosis met a similar fate.
Polymarket is also not the only website that allows users to bet on the new U.S. president; Predictit and Kalshi, established in 2014 and 2018 respectively, are its strong competitors.
However, Polymarket's performance has been remarkable. As of November 5, the cumulative amount bet on the U.S. election on Polymarket has exceeded 4 billion dollars, compared to Kalshi's cumulative betting amount of 230 million dollars. According to Nick Tomaino, an investor in Polymarket, in this election, Polymarket accounted for 85% of the U.S. election betting market share.
Indeed, one could say that Polymarket has seized the zeitgeist, moving from the relatively niche cryptocurrency circle to the public eye. The assassination attempt on Trump, Biden's withdrawal made the U.S. election full of twists and turns, coinciding with an increasingly tense geopolitical situation in 2024, an era of heightened uncertainty which is actually a good time for the rapid development of prediction markets.
What really allowed Polymarket to break through was its product positioning. It doesn't even need to let users know that blockchain technology is used in the backend, nor is it satisfied with just providing an online betting venue. From Coplan's public statements, we can see that what Polymarket is doing is a new type of media.
In May this year, after the company completed a $45 million Series B funding round, Coplan wrote on LinkedIn, "So far this year, the prediction trading volume on Polymarket has reached 202.7 million dollars. But what is most gratifying is seeing the widespread adoption of Polymarket as an alternative news source. The trend is clear: because of Polymarket's existence, people have a better understanding of what is happening in the world. Don't listen to those who talk big and algorithmic news anymore. We are in the midst of a pandemic of misinformation, and Polymarket provides a novel information format driven by financial incentives for truth-seeking, not for attracting clicks."
A netizen Lydia Wu, who has ongoing research on blockchain technology, mentioned that if the ratio of visits/monthly active is analyzed, SimilarWeb shows that Polymarket's visits in September were 16 million, with 90,000 monthly active trading users, a ratio of 178, indicating that a significant portion of people come to Polymarket just to watch, not to invest.
For Polymarket, how to choose topics and how to attract the right "creators" (i.e., those who bet) has become the key to its success, which is clearly the business logic of a media platform. According to foreign media reports, Polymarket has consistently refused to make money in the most likely way—by taking a cut from the site's bets—and is involved in media and consulting businesses, including launching newsletters and collaborating with mainstream media and publishers.
