Polymarket is an decentralized prediction market where users can bet on a variety of outcomes, ranging from election results to sports, pop culture, cryptocurrency price movements and even scientific breakthroughs.
In this article, we will explain how Polymarket works and show you how to make bets on the platform. Although it doesn’t hurt to have some experience with crypto, it’s relatively easy to get started with Polymarket even if you’ve never used cryptocurrency or dont own any crypto coins.
Key highlights:
Polymarket is a prediction marketplace that utilizes blockchain technology.
You can use Polymarket to bet on various events such as election results, sports, crypto prices and much more.
In order to make bets on Polymarket, you will need a crypto wallet that is compatible with the Polygon blockchain and some USDC tokens.
Polymarket is a legit platform, but it’s currently not offering its services to U.S. residents.
How does Polymarket work?
On Polymarket, users purchase shares representing the outcome they’re betting on. After the event happens, shares of the correct outcome can be redeemed for $1, while shares of wrong outcomes become worth $0.
In order to explain how Polymarket works, let’s use the platform’s 2024 U.S. presidential election markets as an example.
As you can see, there is a list of candidates that could potentially win the U.S. presidential election, ordered by their odds.
At the time of writing this article, bettors are giving the biggest chance to Donald Trump, who is sitting at a 52% chance of winning the election. Kamala Harris is in second place with a 45% chance of winning, and Michelle Obama is sitting in third, with the market giving her a 2% chance of winning. There are also numerous other candidates that have a chance of less than 1%.
For each candidate, you can bet “Yes” or “No”. There is some nuance that’s important to understand here – for example, betting “Yes” on Donald Trump in this market is not the same as betting “No” on Kamala Harris. Let’s say that an unexpected event happens and Donald Trump is forced to drop out of the race. Even if the Republican candidate that replaced him defeated Kamala Harris, those with “Yes” bets on Donald Trump would still lose.
After you decide on the outcome you want to bet on, you enter the amount you wish to bet. In our example, shares for the “Yes” outcome for Kamala Harris winning the presidential election are trading at $0.458, which essentially means the market is giving her a 45.8% chance of winning.
With each “Yes” share being priced at $0.458, we can currently get 218.34 shares for $100. If Kamala Harris wins the election, we will be able to redeem each share for $1 and pocket $218.34. Meanwhile, if Kamala Harris loses, the shares will become worth $0.
It’s important to understand that on Polymarket, you are not locked into a bet after you make it. The platform allows users to trade the shares they own before the event described by the market actually transpires.
For example, let’s say that we purchased “Yes” shares for Kamala Harris when her odds were at 45.8%. If her odds increased after we made our bet, we could decide to sell our shares for a higher price and lock in profits before the actual election happens. Of course, we would also have the option of selling our shares at a loss if the odds of Kamala Harris winning decreased after we made our bet.
The U.S. presidential election markets are relatively complex, as they involve multiple candidates. There are also markets on Polymarket that are much more simple, and only involve a simple yes or no question.
Here is an example of such a market, where users can bet on whether the U.S. GDP will decline in Q3 of 2024 or not.
If you’re looking for an in-depth and technical explanation of how a particular aspect of Polymarket works, we recommend you consult the official Polymarket documentation.
How to get started with Polymarket?
If you want to start using Polymarket, you will need two things. A wallet that is compatible with the Polygon blockchain network (we recommend the MetaMask wallet) and some USDC tokens. USDC is a stablecoin that tracks the value of the US dollar. Therefore, you won’t need to worry about the wild price fluctuations that are common in the cryptocurrency market.
You can install MetaMask either as a web browser extension or as a mobile app. For using Polymarket, we recommend using the MetaMask web browser extension, as Polymarket currently doesn’t offer a mobile app.
If you plan to have a substantial amount of funds in your crypto wallets, we strongly recommend you use a hardware wallet alongside MetaMask to significantly improve the security of your funds. Check out our list of the best hardware wallets to use with MetaMask if you want to learn more.
Once your wallet is set up, you will be able to connect to Polymarket by clicking “Sign Up” on the top right of the Polymarket website. Then, select the MetaMask option and approve the sign-in request in your wallet.
Then, click the “Deposit” button. The site will present an address which you can use to fund your Polymarket account. The address will be a long string of numbers and letters starting with “0x”.
If you have USDC tokens on a cryptocurrency exchange such as Coinbase, Binance or Robinhood, you can withdraw them to this address. Make sure that you’re withdrawing USDC on the Polygon network. Otherwise, you could lose your money.
Alternatively, you can buy USDC directly through the Polymarket interface. Polymarket currently has an integration with Moonpay, a company that simplifies the process of purchasing cryptocurrency. This is a convenient way of adding USDC to your Polymarket account, but the purchase fee will be significantly higher than buying USDC on an exchange.
Is Polymarket legit?
Yes, Polymarket is a legit platform. Polymarket has been operating since 2020, has a public leadership team and has established a solid reputation.
Polymarket functions through smart contracts, which makes it very difficult for anyone to interfere with the platform’s operations. In addition, Polymarket has a non-custodial design, which means that users stay in control of their funds at all times and don’t need to trust Polymarket to keep their funds safe.
Still, Polymarket has had some controversy, and had to pay a $1.4 million fine to U.S. regulator CFTC (Commodity Futures Trading Commission). The CFTC alleges that Polymarket offered event-based binary options contracts without registration as a DCM (designated contract market) or SEF (swap execution facility). As a result of the settlement between Polymarket and the CFTC, Polymarket agreed to stop offering its services to United States customers.
Although Polymarket is legitimate as a platform, it’s important to keep in mind that the quality of markets on Polymarket can vary significantly. Some markets might be defined poorly, which can lead to controversy when it’s time to decide which outcome is valid. We recommend you only stick to markets that have very clearly defined conditions for deciding the outcome.
How does Polymarket make money?
Polymarket is currently not focused on monetization, and the platform doesn’t charge any fees. Despite this, you will need to pay some transaction fees when using Polymarket, as blockchain validators require fees to be paid before they process transactions.
The company is able to operate thanks to funding from venture capital investors, and potentially other means such as providing liquidity and market making services. However, it is very likely that Polymarket will introduce fees at some point in the future to start generating revenue.
Here’s what Polymarket Founder Shayne Coplan had to say about the platform’s strategy in an interview with Forbes:
“We're focused on growing the marketplace right now and providing the best user experience. We'll focus on monetization later.”
The bottom line
Polymarket is a great platform if you want to bet on the outcome of future events. While some users might be put off by the fact that you need to have a crypto wallet if you want to use Polymarket, the platform uses blockchain technology for good reason. Blockchain technology enables complete transparency by publicly recording all transactions and also eliminates the need for a central authority in trading.
The most cost effective way to get USDC tokens for use on Polymarket is to buy them on a crypto exchange. We provide a list of the best crypto exchanges for beginners if you’re wondering which exchange to use.
