Prediction markets have become an intriguing and emerging sector, particularly due to their cyclical nature, which has been highlighted by the ongoing U.S. election. In one prominent prediction market, nearly half of the participants believe Trump will win, while slightly more think Harris will take the presidency. The current betting pool has amassed an impressive $560 million, underscoring the intense interest in this sector.
The prediction market sector has seen significant growth this year, driven largely by the upcoming U.S. election. Polymarket, a leading protocol in this space, has played a crucial role in this growth, often being cited in reports as the dominant force behind the sector's expansion. This protocol is estimated to hold a similar market share to what Chainlink ($LINK ) once held in the oracle market, controlling about 70-80% of the market. This dominance is expected to persist, especially as election-related liquidity reaches its peak.
Despite the sector's growth, many projects within the prediction market have struggled to gain traction. Of the approximately 50 targets included in Rootdata’s prediction market track, only 17 have completed token issuance, but these projects have failed to attract significant market attention.
Polymarket’s dominance is clear, with the largest betting pools on its platform centered around the U.S. election. The platform's total value locked (TVL) ranks 26th in the Defi subcategory, with nearly $100 million, of which Polymarket accounts for 76%. Other protocols in the prediction market, like TG Casino, Lumi Finance, and Azuro, also contribute, but their impact is far less significant.
Polymarket's activity is particularly noteworthy, with 48,000 active addresses in the past month, vastly outpacing competitors like Azuro, which has only 1,400. This strong correlation between election events and market activity underscores the cyclical nature of the prediction market, with activity likely peaking as the election draws nearer.
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