Trump vs. Harris, who will win the US election? In a certain [prediction market], 48% of people think Trump will win, and 49% think Harris will win. The current betting pool has accumulated nearly $560 million.

Prediction is a very interesting and niche track, and this year the industry has seen very strong growth rates.

  • The growth of this track mainly comes from the impact of the US election

The protocol that has the main growth advantage in this track is Polymarket. It can also be said that Polymarket is supporting the growth of this track.

It is mentioned in almost every report on the [prediction market] sector.

This article will explain why the [prediction market] sector can be viewed as a cyclical sector from the perspective of its composition and leading protocols.

And by the way, some other more specific [4-year cycle] targets

-Business model/segment composition/data status

The business model of the prediction market is very simple, even with a gambling element, but it is simpler than the logic of a card game, just like you only need to guess the heads or tails of a coin or answer a multiple-choice question with only 4 options.

The upstream of this track requires the use of external data sources provided by [oracles] to ensure the accuracy of on-chain results.

The current forecast for the overall market situation is that projects that have already completed the TGE stage are basically in a half-dead state, and new projects have no real business support.

According to the [prediction market] track targets included by Rootdata, there are about 50, of which 17 have completed token issuance, but it can be said that they have not received much market attention this year.

The conclusion drawn from reports issued by some third parties is that this track is somewhat similar to the oracle market in the past. In the past, the oracle sector was dominated by one target ( $LINK  ) which accounted for about 70-80% of the market share.

The current prediction market is the same, and Polymarket estimates that it occupies a similar market share.

And this trend is believed to be difficult to change in the short term, because as the election results approach, this narrative that drives track liquidity will come to an end, and it will be difficult for any subsequent topics to inject business liquidity into new protocols.

Because currently the largest pool on the platform is betting on the results of the US election, the top four pools are also related to the US election, and the size of the fifth pool is not even 2% of the first four election-related topics.

To further extend the situation of defillama's track, the [prediction market] track is currently ranked 26th in the Defi subcategory, with a total TVL of nearly 100 million (and Polymarket happens to account for 76% of it).

However, we still need to understand what other targets there are besides Polymarket: From the long chart report I made, we can see that besides Polymarket, there are 8 protocols with TVL scales of more than one million, which are

  • TG Casino、Lumi Finance、Azuro、Thales、Gnosis Protocol、Augur、EtherFlip、WINR Protocol。

It can be said that the prediction market is also the only sector that has shown vitality in the gambling track since the past Defi Summer.

Among the other sub-concepts of Defi that have shown vitality in this round of cycle, lending, on-chain income and re-staking do not have such gambling attributes as the prediction market.

Currently, the number of active addresses on the chain of Polymarket in the past 30 days is 48,000, which is dozens of times higher than the 1.4K on-chain active addresses of Azuro, which ranks fourth in TVL (because the data of the second and third cannot be retrieved).

This report also lists the changing trends of Polymarkety's active addresses over the past year. From a temporal perspective, the degree of activity is positively correlated with changes in election events.

-Why is this an emerging cyclical track?

[Prediction market] is not a brand new track. Similar to#SocialFiwhich has become popular in this cycle, both are sectors that were born very early.

Perhaps there was a small wave of thoughts about [prediction market] in the last round of Defi Summer, but it lacked some prerequisites, such as:

(1) The development of upstream oracle applications is immature

(2) Missed the narrative that drove the track (the U.S. election).

The growth of the prediction market this year is closely related to the US election. As a standout target, Polymarket is not limited to its application in this event. The results of some major events in the future will also provide usage scenarios for it.

It is simply because the US election is not only of long-term significance, but is also one of the most controversial topics in the world. Therefore, you can imagine that on the eve of the election every four years, it will bring liquidity to its business.

Further extending the above data: Currently, the largest pool in Polymarket is the bet on the results of the US election. The top four pools are also related to the US election. The size of the fifth pool is not even 2% of the first four election-related topics.

You can imagine that when the election expectations are realized, the most popular deterministic narrative of this track will come to an end. Even if there are any global events such as geopolitical events in the future, they will not bring relatively sustained market attention to its business like the US election.

However, there is no public information disclosing Polymarket's future coin issuance expectations. But as an old protocol, it has been hit by the Americans before. It is uncertain whether the semi-compliance after the settlement will affect the issuance of tokens.

But if I choose to issue coins, I think a better node would be to airdrop and issue them within three months after the election results come out, so that there will still be a certain amount of market attention.

As for whether the token can surge, I think we should adopt a similar logic as $CHZ and make low-level layout more than half a year before the event.

Finally, to supplement the logic about the election, there is actually a meme that was affected by the election and was listed on #Binance : $PEOPLE Constitutional concept.

-Other cyclical targets

In addition to the election expectations, there are also mining coins with reduced production, led by $BTC, such as: $LTC $DASH $ETC, etc. This is the fundamental design itself.

I think that a mining coin with [production reduction attribute based on computing power/time] will be better designed than a mining coin with [non-constant time based on computing power], because it will bring a fixed cycle to the secondary market to expect events to happen.

Just like the corporate earnings season, market analysts and traders will produce reports and adjust strategies around the earnings release dates.

In addition to the mining coins that have their own production reduction attributes, $CHZ in the sports sector also has a relatively strong cyclical attribute because of the World Cup held every four years.

And what’s interesting is that they all have a four-year cycle.

The four years represented by Big Pie have brought a very strong "4-year cycle" color to the cyclical attributes of this industry. It is also the basis for the current popular "carving a boat to find a sword", because behind this matter there is a game of upstream supply and demand, and it is not aimless.