Written by: Yangz, Techub News

Polymarket is undoubtedly the most popular Web3 application behind this US election. When major mainstream media such as the Wall Street Journal were still predicting the voting results in key swing states, this decentralized prediction market founded by the 26-year-old "prodigy" Shayne Coplan had already made the judgment of "Trump's victory" in advance. In the past few days after the election "dust settled", there has been a discussion in the circle about whether Polymarket belongs to the Ethereum ecosystem, hoping to use the popularity of Polymarket to save some "face" of the Ethereum ecosystem. Although Polymarket is sought after by many bigwigs such as V God and is regarded as a "truth machine", the platform has also been subject to various controversies. This article aims to take stock of the various doubts surrounding Polymarket, hoping to look at this platform rationally. After all, the more popular it is, the calmer you have to be.

Political stances of founders and investors

First, there are questions about the political stance of Polymarket founder Shayne Coplan and the platform's main investor Peter Thiel. (New York Times) Reporter Teddy Schleifer posted a group photo on Twitter on July 20. In the photo, Shayne Coplan, with his curly hair, stands out among the Republican representatives wearing suits and slicked back hair. Other people in the photo include Trump's eldest son Donald Trump Jr. and Trump supporters such as Omeed Malik and Shervin Pishevar. Judging from the time, the photo should have been taken during the Republican National Convention.

 

In addition to Shayne Coplan himself, the main investor of the prediction market platform, PayPal co-founder and Founders Fund founder Peter Thiel, who is an open Trump supporter, has also attracted questions about his "political bias." Although Shayne Coplan has responded to the relevant questions, emphasizing that Polymarket adheres to a non-partisan stance and is not a political tool, and that Peter Thiel has no board seat and no so-called control, can this response really eliminate people's doubts? There are actually some reports on this matter that cannot be ignored.

According to Politico and its reporter Daniel Lippman, Shayne Coplan not only showed up at the Republican National Convention, he also hosted a post-conference party for the Democratic National Convention. In addition, Coplan took a photo with Democratic vice presidential candidate and Minnesota Governor Tim Walz at a Harris campaign fundraiser.

 

Therefore, in addition to the possible factor of "political stance", Shayne Coplan's actions may just be to promote Polymarket, just a pure "advertising offensive." As Bloomberg reported, Polymarket has spared no effort to get out of the circle. The platform distributed baseball caps with its own brand to attendees during the Republican National Convention and hired people (paid $1,050) to act as human billboards for publicity. Earlier this year, Polymarket also posted boxing-themed championship posters in Manhattan to promote Trump's election odds against Biden. In addition, the platform announced in July that it had hired well-known political polling analyst Nate Silver as a consultant.

"Betting with real money can also be a manipulation of capital"

In addition to questioning the founder's political stance, the market also questioned whether there was "capital manipulation" in the Polymarket election prediction market. On October 18, the Wall Street Journal published an article stating that Trump's leading position on Polymarket was actually a "momentum" of capital. It pointed out that this surge may be a "false impression" caused by four Polymarket accounts. Miguel Morel, CEO of blockchain analysis company Arkham Intelligence, also stated after review that the four accounts belonged to the same entity. For a time, the market was in an uproar.

However, according to the latest reports, the “whale” is a French investor who calls himself Théo. In an interview with the Wall Street Journal, he pointed out that he had lived in the United States and worked as a trader in several banks. Théo said that there was no “political stance” behind his huge bets, he just wanted to “make money”, and most of the invested funds were “available liquid assets”. In addition, Polymarket also stated that after conducting an investigation, the company concluded that the trader made bets based on “personal views on the election” and did not find any information indicating that the user manipulated or attempted to manipulate the market.

Watered Trading Volume

After the authorities "ruled out" the above possible "capital manipulation" doubts, is Polymarket really more reliable than traditional polls because it is "real money betting" as Elon Musk said? In fact, the public has also raised doubts about the actual trading volume of the platform. Blockchain risk analysis company Chaos Labs released a report pointing out that about one-third of the trading volume in presidential predictions alone may be wash trading, while Inca Digital found that the presidential election prediction trading volume reported on the Polymarket website did not match the on-chain data. Inca Digital said that the actual transaction volume of the presidential election prediction market was about US$1.75 billion, while the figure reported by Polymarket was US$2.7 billion. Regarding this matter, the author has not yet found a response from Polymarket. Wash trading is actually very common in Web3 applications. In addition to the fact that the platform itself may conduct secret operations for more glamorous data, the charm of "airdrops" will also attract many Degens to come and "ambush" in advance, forming a false prosperity.

In September of this year, The Information quoted sources as saying that Polymarket is considering raising more than 50 million US dollars through token issuance, but Polymarket has not yet made a final decision, and there is no clear timetable for token issuance. If "wash trading" is no longer surprising, should it be the same for Polymarket, which is planning to enter the prediction market? In my opinion, this practice actually endangers the nature of the prediction market. When a large number of fake users flood into the prediction market, their choices do not represent the real market sentiment. If the odds are almost the same, they will make a choice at random, but if there is a large gap in the odds, due to the characteristics of degens, they may think a little and invest in the side with even a 10% chance.

"On the surface, they obey the supervision, but in fact, they act recklessly"

In January 2022, Polymarket was fined $1.4 million by the U.S. Commodity Futures Trading Commission (CFTC) for "operating in the United States without registration." As part of the settlement, the company promised to gradually stop its services in the United States and prohibit U.S. users from accessing it. However, the fact is that in addition to a large number of U.S. users who can still continue to access the site through VPNs and other means, according to Bloomberg, Meta's advertising library shows that Polymarket owner Blockratize recently spent about $269,875 on Facebook and Instagram to deliver election ads to millions of U.S. users. In addition, Armand Saramout, senior development director of Polymarket, sought a sponsorship agreement with U.S. social media KOLs in September. In the past few weeks, Instagram bloggers with a large number of fans have been using tags such as#PMPartnerand#PolymarketPartnerto post Polymarket-sponsored content. Although a Polymarket spokesperson confirmed that the move was not intended to stimulate transactions among U.S. visitors, it always gives people a feeling of "obedience on the surface, but wantonness in reality."

Summarize

The emergence of Polymarket is definitely a boon to the Web3 industry, and we expect this decentralized prediction market platform to become an “alternative news source” or “the future of media,” as Coplan said. However, what Polymarket needs to consider now is that the U.S. election is settled, and without such a hot topic, how should it develop in the future? Perhaps launching a token will be one of the ways it considers to maintain growth, but even if a token is launched, please don’t forget its mission to provide the public with more accurate and real-time event predictions.

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