Prediction markets are not a new concept; they have existed in various fields for decades. Traditional prediction markets usually operate through centralized betting or financial platforms, where participants can speculate on the outcomes of future events such as sporting events, political elections, or economic trends.
With the advent of blockchain technology, prediction markets have entered a new stage of development. The decentralization, transparency, and immutability of blockchain have made these markets more fair and trustworthy. Such platforms allow global users to predict future events without relying on a trusted intermediary, increasing the fairness and inclusivity of the market. Among the many crypto prediction platforms, Polymarket has stood out due to its unique operating mechanism and its ability to capitalize on trending political events, becoming a leader in the field.
According to data, Polymarket currently dominates almost the entire crypto prediction market share.
Polymarket is a prime example of a blockchain prediction market, garnering significant attention and participation during the U.S. presidential election. During this period, the platform saw a surge in users and transaction volumes. As of now, over 166,000 users have participated in betting on the platform, with a total transaction volume exceeding $2.96 billion. Moreover, these figures are still on an upward trend.
Polymarketâs Growth Tied to the U.S. Election
A search through Google and Polymarketâs market data shows that Polymarketâs rapid development is highly correlated with the U.S. elections. Multiple bets are placed around election-related topics.
The rapid development of prediction platforms this year can also be attributed to external factors such as the increasing adoption of blockchain technology and improvements in infrastructure.
More Than Just a Betting PlatformâAlso a Sentiment Indicator
Polymarketâs success is not only due to providing a platform for predicting events but also because it has gradually become a barometer for market sentiment. Polymarketâs theoretical foundation comes from Friedrich Hayekâs famous paper, The Use of Knowledge in Society. Hayek argued that economic incentives are the key to driving people to better understand uncertainty. When economic incentives come into play, people are inclined to seek out more accurate and better information sources, think more deeply, and attempt to place their money on outcomes that are more likely to happen.
Compared to traditional primary and secondary markets, prediction markets create a unique âtrading structureâ where users are both predictors and investors, able to earn financial benefits by participating in event predictions. The potential for airdrops is also a reason why users participate.
Prediction Markets Gain Attention
According to a report by The Information, insiders revealed that the prediction market Polymarket is seeking to raise $50 million in funding. Polymarket is also considering issuing its own token, though The Information did not provide further details.
Although Polymarket currently holds a dominant market share in the crypto prediction market, it still has significant room for growth compared to traditional prediction markets. Several institutions have expressed optimism about this sector or have started building their own prediction markets.
Cryptocurrency investment firm 1confirmation mentioned in a letter to LPs that the scale of prediction markets could grow 100-fold in the next few years. DWF Labs stated that it is seeking to support projects related to prediction markets and encouraged relevant teams to contact them via their website. According to a report by The Block, Wintermute is launching a prediction market called OutcomeMarket.
