Author: Austin Weiler, Messari Research Analyst; Translated by: 0xjs@Golden Finance
Polymarket is one of the darlings of the cryptocurrency space in 2024. It initially attracted attention with a unique value proposition, offering users the ability to profit from predictions in a variety of markets – a product that was previously primarily associated with sports betting. This differentiator enables users to access and profit from predictions in a variety of markets such as entertainment, business, and science.
However, the US election is a major event that everyone wants to predict and profit from. This is not limited to the results, but also includes the margin of victory in specific states, whether Biden will be replaced, what Trump will say at the next rally, etc. The hype around the election helped Polymarket's monthly trading volume surge 42 times between January and October 2024.
While this unprecedented growth is impressive, many believed that Polymarket’s success was election-driven and predicted that its usefulness would eventually decline after the election. Now, nearly a month later, market volume and unique user metrics on Polymarket suggest that it can and will remain useful in the long term.
As expected, Polymarket gained significant momentum in the month leading up to the election. During this 30-day period (October 6 to November 5), Polymarket’s daily trading volume hit an all-time high, with an average daily trading volume of $103 million.
After the election, it was widely expected that trading volume would fall back as retail investors focused primarily on markets related to the U.S. election. Indeed, average daily trading volume fell to $58 million from November 6 to November 30, a 44% drop from the peak of the 30-day rolling average.
While this drop is significant, it is not as dramatic as it might seem if we zoom out further. Non-US election-related market volume totaled $1.6 billion in November.
This is higher than the volume in any single month between January and September 2024. While this short-term outlook is no guarantee of survival, it is a positive initial indicator that Polymarket has sufficient product-market fit to sustain future growth.
To maintain this momentum, Polymarket must continue to improve its product, especially in the absence of major prediction events such as the US election. In addition, the prediction market space is likely to attract more competition, including new entrants and existing players. To ensure sustainable growth, Polymarket should focus on:
Providing users with more features, including syndicated betting and cross-market syndicated betting (for example, combining political event predictions with sports events).
Emphasize unique features that differentiate it from competitors (Web2 and Web3), such as the financialization of predictions.
Explore other blockchain products beyond Polygon.
Continue to improve their user experience to attract a wider audience.
Polymarket’s journey is far from over, and while the road ahead is challenging, the signs are that it is resilient and adaptable.