What’s the buzz around decentralized prediction markets for the 2024 elections? See how you can predict the next president and cash in on your insights.
Table of Contents
What are decentralized prediction markets and how do they work?
Popular bets on polymarket
How to make money from decentralized betting markets?
Ever wondered if you could predict the outcome of an event and profit from your foresight? Decentralized prediction markets make that possibility a reality. Recently, these markets have seen explosive growth, particularly with the 2024 U.S. presidential elections approaching.
Polymarket, a leading crypto-based prediction market platform, has experienced a dramatic surge in activity. According to Dune Analytics, Polymarket’s volume surpassed $100 million in June alone, marking a record month in the platform’s breakout year.
The surge continued into July, with bets worth $9.3 million placed on the first day alone. This single-day volume exceeded typical monthly volumes seen on Polymarket last year, which ranged between $3 million and $8 million.
From January to May 2024, monthly volumes at Polymarket ranged between $40 million and $60 million, marking a gigantic increase of 7 to 12 times compared to the previous year’s monthly volumes. In June, $111 million in bets were placed, the highest ever for the platform.
Polymarket monthly volume | Source: Dune Analytics
One of the most popular contests on Polymarket is the “Presidential Election Winner 2024,” which has attracted bets worth over $208 million since its inception. Currently, the odds favor Donald Trump at 66% and Joe Biden at 21%.
Source: Polymarket
Analysts at research and brokerage firm Bernstein note that blockchain-based platforms like Polymarket are amplifying the efficiency of election markets by providing transparency and liquidity. They mentioned this in a recent note to clients, highlighting how Polymarket, built on blockchain technology, is increasing public appreciation of crypto’s role in politics.
With such heightened interest in these platforms, let’s delve deeper into how they operate, explore notable bets, identify the leading platforms, and discover how you can participate and potentially profit without placing bets.
What are decentralized prediction markets and how do they work?
Decentralized prediction markets are betting platforms that allow people to bet on the outcomes of real-world events using blockchain technology.
These markets operate on decentralized networks, which means there is no central authority controlling the transactions. Instead, they use smart contracts—self-executing contracts with the terms of the agreement directly written into code. This ensures that all transactions are transparent, secure, and tamper-proof.
One of the most popular decentralized prediction markets is Polymarket. Polymarket runs on the Ethereum (ETH) Layer 2 (L2) network, Polygon (MATIC), and allows users to speculate on various events, such as political outcomes, entertainment, and sports, using the stablecoin USDC. This integration ensures liquidity and stability in transactions.
Polymarket uses an automated market maker (AMM) pool model similar to Uniswap (UNI). Liquidity providers supply on-chain market liquidity, and users trade these tokenized shares to place their bets.
For example, if you believe a particular candidate will win an election, you can buy “Yes” shares at a price reflecting the current market odds. If the event occurs as you predicted, you gain profits. If not, you suffer losses. This system allows you to profit from your knowledge and predictions about various events.
Polymarket isn’t the only player in the decentralized prediction market space. Platforms like Augur and Hedgehog also offer similar services, allowing users to speculate on a variety of events.
Augur, for instance, operates on the Ethereum blockchain and uses a native token (REP) for betting. Hedgehog is another emerging platform, leveraging the same principles of decentralized betting with a focus on user-friendly interfaces and diverse market offerings.
Popular bets on polymarket
The buzz around the 2024 US presidential election has driven a flurry of activity on Polymarket. Let’s delve into some of the most popular bets making rounds and what they reveal about public sentiment.
Biden’s lackluster debate performance
The first presidential debate on June 27, 2024, marked a critical change in betting patterns on Polymarket. Joe Biden’s performance, widely criticized as one of the weakest since the era of televised debates began, sparked a surge in bets.
Before the debate, Biden had a 91% chance of being the Democratic nominee. However, following his performance, this dropped to 71%, with over $21.2 million bet on Biden and $5.06 million on Kamala Harris, who has garnered 11% support until now.
Source: Polymarket
Simultaneously, the probability of Biden dropping out of the race increased sharply from 19% before the debate to 44% by July 1. Although it has slightly improved to 35%, the volatility reflects the uncertainty surrounding his campaign.
Source: Polymarket
On the Republican side, the betting sentiment is overwhelmingly in favor of Trump. With over $6.6 million in bets, Trump is predicted to have a 99% chance of becoming the Republican nominee, contrasting sharply with the fluctuating confidence in Biden’s campaign.
Source: Polymarket Swing states predictions
Swing states are crucial in determining the election outcome, and Polymarket’s prediction polls indicate a Republican sweep in key states.
For instance, Republicans are predicted to win Nevada (71%), Michigan (53%), Pennsylvania (58%), Arizona (73%), Wisconsin (56%), Georgia (80%), and North Carolina (83%).
With over $3 million in total bets backing these predictions, the Republican Party has emerged as the clear winner in all these battleground states.
There’s also a notable prediction regarding international affairs: there’s a 56% chance that Israel will invade Lebanon before September, adding fuel to the already complex geopolitical situations across the world.
How to make money from decentralized betting markets?
Decentralized prediction markets offer opportunities to make money, but they also come with very high risks. Here’s how you can profit from these platforms, along with some important advice.
Becoming a liquidity provider
One of the easiest ways to make money on platforms like Polymarket is by becoming a liquidity provider. Here’s how it works:
Deposit USDC: You can deposit USDC into the platform’s liquidity pool.
Earn fees: By providing liquidity, you earn a share of the trading fees whenever users place bets.
Automated market maker (AMM): The platform uses an AMM model, ensuring that your funds are used to facilitate trades and bets efficiently.
This method provides a steady stream of income without directly betting on events, making it a lower-risk option compared to direct betting.
Making direct bets
Another way to make money is by placing direct bets based on the odds of specific events. For example:
Choose an event: Select an event you want to bet on, such as the outcome of the presidential election.
Analyze the odds: Consider the current odds and make your prediction.
Place your bet: Bet an amount you are comfortable with, knowing that if your prediction is correct, you can earn a significant return.
Besides Polymarket, several other platforms offer decentralized prediction markets. These platforms work similarly, allowing you to provide liquidity or place direct bets on various events.
While these opportunities can be lucrative, they come with very high risks. If the odds don’t go in your favor, you can incur substantial losses.
It’s crucial to trade cautiously and never invest more than you can afford to lose. Always do thorough research and consider seeking advice from financial experts before diving in.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
