The World of Polymarket
Betting on Everything, Everywhere, All at Once
Imagine a world where you could place a bet on nearly any event you can think of!
Will next year’s Oscars see a surprise winner?
Will AI replace your friendly neighborhood barista by 2025?
Will it actually rain when your weather app says it will?
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Now, what if you could do it all from your phone, backed by a decentralized platform that operates without a single person or company controlling your funds? Welcome to Polymarket, the crystal ball for the modern, blockchain-enthused gambler.
Polymarket is a new twist on betting markets, but it’s also much more than that. In a sense, it's where the casual "I bet you ten bucks" chatter meets the technology behind Bitcoin and Ethereum. It’s a place where speculation becomes democratized, where anyone can put their money behind predictions on a decentralized system, and all without a central bookie skimming off the top. At first glance, it may seem like just another betting platform, but peel back a layer, and you’ll find a lot more going on.
So grab your lucky coin, and let’s dive into the fascinating, fast-paced, and sometimes eyebrow-raising world of decentralized betting with Polymarket. Spoiler alert: You might just find yourself wishing your regular old sports betting app had a little bit more blockchain running under the hood.
1) What is Polymarket?
Polymarket is a decentralized prediction market that enables users to bet on real-world outcomes using blockchain technology.
Launched in 2020 by Shayne Coplan, Polymarket uses the Polygon blockchain to allow anyone with cryptocurrency (primarily USDC) and internet access to wager on a wide variety of topics, from political events and pop culture to sports and tech trends.
Unlike traditional betting markets, Polymarket has no central authority handling bets or payouts; instead, everything is processed transparently and autonomously on the blockchain, offering users a more open, censorship-resistant platform than centralized prediction sites like PredictIt and Kalshi.
The History of Prediction Markets
While the concept of betting on future events might seem modern, it actually dates back centuries. In 1503, betting on the outcome of papal elections was already popular in Rome, where cardinals’ attendants, armed with insider knowledge, could make sizeable profits by accurately predicting who would be the next Pope. The practice was so common that Pope Gregory XIV eventually banned wagers on papal outcomes in 1591, setting the punishment as excommunication - a testament to how entrenched the practice was even then.
Prediction markets have historically been controversial. For instance, critics today argue that wagering on elections could influence voting behaviors or give outsized power to wealthy bettors. Supporters, however, see these markets as valuable for gauging public sentiment and educating people about the political process.
How Polymarket Stands Out
Polymarket leverages decentralized technology to stand apart from its peers, offering a platform that is unrestricted by CFTC-imposed bet limits, allowing bets of any size (a significant advantage over PredictIt, where users are capped at $850 per contract). This freedom, combined with the use of stablecoin USDC, makes it accessible globally to anyone with a digital wallet.
The platform also offers a more diversified experience, with markets that can range from simple yes-or-no questions (binary markets) to multi-option questions, like guessing which cryptocurrency might outperform others. Polymarket’s reliance on decentralized oracles, such as UMA, ensures that outcomes are transparently verified by the community rather than by a single authority, adding an extra layer of credibility to market resolutions.
2) How Does Polymarket Work?
Polymarket operates as a decentralized prediction market where users can bet on various future outcomes using blockchain technology. Here’s a breakdown of how it functions.
Betting Mechanics and Payouts
Users on Polymarket bet on the outcome of real-world events by purchasing shares in different outcomes, usually in a binary format - either "Yes" or "No." Each outcome has a price between $0 and $1, representing the odds (e.g., $0.70 for "Yes" means a 70% likelihood).
Since the price of each outcome fluctuates as new information emerges, you can choose to sell your bet at the current market price before the event’s resolution. This gives you a chance to lock in profits or cut losses based on changing odds, rather than waiting until the final outcome.
This flexibility is a big shift from traditional betting on sports and similar events, where your wager is locked in until the outcome is decided. With Polymarket, you’re free to cash out early by selling your bet at any time, taking advantage of shifting odds to secure profits or limit losses as the event unfolds.
Once the event resolves, winning shares become worth $1, while losing shares drop to zero, and users either profit or lose based on their stakes and the final outcome.
Payouts are provided via USDC - a stable cryptocurrency pegged to the U.S. dollar to avoid price volatility.
Decentralized Structure
One of Polymarket's key innovations is its decentralized structure, enabling transparency and freedom from centralized control.
Polymarket runs on smart contracts, which are automated agreements deployed on the Polygon blockchain. These contracts lock users' funds upon betting and release them to winners without requiring a central authority. These smart contracts combine with a decentralized order book for trade execution with off-chain components that match orders, allowing a smooth user experience without compromising security.
To resolve outcomes, Polymarket relies on decentralized oracles like UMA, which gather and verify real-world data in a transparent, community-driven way. If any data is contested, UMA’s token holders vote on the resolution, ensuring a fair outcome.
Centralization
While Polymarket is largely decentralized, certain elements remain centralized for functionality and compliance. For example, Polymarket’s process for adding new betting markets requires users to submit proposals through official support channels, where Polymarket reviews and approves them - a level of oversight that limits open access.
Additionally, to comply with a settlement agreement with the CFTC, U.S. access is restricted, which necessitates a centralized system to manage user geolocation and restrict transactions. Centralized transaction monitoring is also required to meet anti-money laundering regulations, adding another layer of oversight to this otherwise decentralized platform.
3) Market Types & Milestones
Polymarket offers a diverse array of markets for users to wager on, covering topics like elections, global conflicts, cryptocurrency trends, and cultural events. Most markets use a binary outcome structure - betting on “Yes” or “No” - but some allow for multiple outcomes, especially on speculative topics like crypto market caps.
While the U.S. presidential election dominates betting volumes on Polymarket, there are plenty of other intriguing markets to dive into. Here’s a quick look at some of the unique markets available right now.
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Milestones and Growth: Since its 2020 launch, Polymarket has seen rapid growth, fueled by high-profile events like the 2024 U.S. presidential election. In 2024 alone, Polymarket really started to take off and started breaking record after record as far as active users and betting volume goes. October trading volumes soared past $2.1 billion and active traders topped well over 200,000.
Polymarket owes most of its explosive momentum to the popularity of its largest betting market - the winner of the 2024 U.S. presidential election, which alone has drawn over $2.1 billion in bets. As election day nears, mainstream and alternative media alike are citing Polymarket’s odds, keeping it at the forefront of the national conversation.
4) The Legal and Regulatory Landscape
Polymarket faces strict U.S. regulations due to its event-based betting markets, particularly for political outcomes, which are largely banned by the Commodity Futures Trading Commission (CFTC). Platforms like Polymarket and PredictIt, which allow users to bet on election outcomes, are caught in the crossfire of a regulatory tug-of-war over whether such markets are detrimental to the democratic process.
In 2022, Polymarket reached a $1.4 million settlement with the CFTC for offering “unregistered event contracts,” which were deemed illegal in the U.S. This required Polymarket to restrict access for U.S.-based users, though international users remain free to participate.
The CFTC has also recently proposed a total ban on election betting, arguing that such markets could influence voter perceptions and undermine trust in democratic processes.
5) Interpreting Polymarket Odds
Polymarket’s unique approach to decentralized betting has made it a focal point during the 2024 U.S. presidential election. The platform has received significant attention for its real-time odds on political and economic events, with mainstream news outlets frequently referencing its data as a barometer of public sentiment. Polymarket’s predictions offer a fresh alternative to traditional polling, tapping into the collective intelligence of its users, and have even been integrated into financial data services like Bloomberg Terminal, adding a new level of credibility.
Mainstream media often misinterprets Polymarket odds, suggesting that they indicate one candidate "leading" another, similar to traditional polls. However, Polymarket odds reflect the likelihood of a candidate ultimately winning the event (like an election), not current polling gaps or day-to-day standings. Traditional polls measure how far ahead one candidate is over another at a given time, while Polymarket odds indicate the market's estimate of the probability of the final outcome.
It’s important to note that Polymarket odds differ from traditional polling by offering a continuously updating picture of likely outcomes. While polls capture public opinion at a set moment, Polymarket’s prices change in real time as users buy and sell shares based on the latest news and sentiment.
6) Polymarket’s Future
Ultimately, while Polymarket’s growth is compelling, its future hinges on balancing regulatory compliance with continued innovation, cementing its role as a real-time aggregator of public sentiment on global events.
Allowing third-party integrations could expand features and engagement, with the recent announcement of a partnership with D8X to introduce leveraged prediction markets. This collaboration will enable amplified bets through D8X’s futures model, broadening user options.
Beyond U.S. politics, sports are the next big draw on Polymarket, with markets on the 2025 Super Bowl Champion and Champions League Winner attracting high betting volumes.
It remains to be seen if the popularity of Polymarket will continue after the U.S. presidential elections are wrapped up. Will the betting volumes disappear or will they change over to other markets like sports, stocks, crypto or other political bets?