The Rise of Encryption Prediction Platforms: Exploring New Trends in the Blockchain Industry

In recent years, cryptocurrency prediction platforms have emerged as a new force in the blockchain industry, rapidly developing and attracting widespread attention. This unique market model allows users to predict the outcomes of events by purchasing shares related to the results of future events, not only opening up new investment channels for investors but also providing valuable data resources for research institutions. Industry reports indicate that the scale of cryptocurrency prediction platforms is experiencing explosive growth and is expected to maintain a high-speed growth trend in the coming years.

Among the many prediction platforms in the encryption industry, Polymarket stands out with its unique operational mechanism and event marketing that keeps up with current trends, becoming an industry leader. As a decentralized prediction market platform based on Blockchain, Polymarket allows users to bet on the future outcomes of various topics using cryptocurrency. It operates on the Polygon Blockchain utilizing smart contracts, significantly reducing transaction fees and accelerating transaction processing speed. Since its launch, Polymarket has attracted a large number of users and followers with its high transparency and user-friendly experience, making it the largest encryption prediction platform currently.

This article will delve into the operating mechanisms and principles of Polymarket, while analyzing the new trends in the encryption prediction market, aiming to provide readers with a comprehensive and in-depth insight into the encryption prediction market.

Polymarket: Understanding the Real World Through Betting

Polymarket is a decentralized prediction market platform based on Blockchain technology that has gained widespread attention in recent years. The platform was founded by Shayne Coplan in 2020, and its creation is closely related to the profound insights of its founder during the pandemic. Faced with a plethora of uncertain views and opinions in the market, both sides often stick to their arguments, making it difficult to persuade each other. Coupled with the proliferation of misinformation and the influence of profit-seeking algorithms, it has become increasingly challenging for people to see the truth. Therefore, Coplan founded Polymarket with the aim of enabling people to understand more accurately what is happening in the real world through a completely new approach.

The theoretical basis of Polymarket comes from Hayek's famous paper "The Use of Knowledge in Society." Hayek believed that economic incentives are key to driving people to better understand uncertainty. When economic incentives are at play, people tend to seek out more and better sources of information, think more deeply, and try to place their money on the outcomes that are more likely to occur. Coplan put this theory into practice, simply put, by using betting as a way to understand the real world.

When you open the Polymarket website, the homepage prominently displays the global hot news events that have garnered attention, such as the likelihood of Trump winning in the upcoming presidential election, whether there will be a conflict between Musk and Zuckerberg, and the expected number of interest rate cuts by the Federal Reserve this year. Users can select specific markets based on their personal interests and purchase "outcome shares" that represent the potential results of these events. The market prices of these shares reflect the collective perception of the likelihood of the events, providing users with an intuitive reference. Before the market resolution, users enjoy the flexibility to sell their held shares at any time, and this process usually does not require paying high transaction fees. Once the results of the relevant events are officially announced, users who predicted accurately have the right to redeem their shares at a price of $1 per share, while users who predicted inaccurately will lose the value of their shares. It is worth noting that all transactions and settlements on the Polymarket platform are automatically executed through smart contracts, a mechanism that ensures fairness, transparency, and security of transactions.

Polymarket introduces a reward and punishment mechanism that encourages each user to take responsibility for their own opinions, thereby making the statistics on the platform better reflect the real market situation. Compared to previous platforms or social media, Polymarket's prediction results are much closer to the truth. For example, in the case of room temperature superconductors, although some authoritative media were skeptical, influencers confidently confirmed its realization and even fabricated evidence. In contrast, Polymarket provided a more rational prediction, with a truth-to-falsehood ratio of one to nine, demonstrating the rationalization of user opinions under the reward and punishment mechanism.

Currently, social media and spam information are rampant, and people's ways of understanding things are often limited. These institutions may not be able to remain objective due to vested interests, and social platforms also recommend information based on user interests, leading to the information cocoon effect. Polymarket, as a decentralized prediction market platform, maintains fairness and justice based on Blockchain technology, providing an opportunity for change in social opinion. Its characteristics of being politically correct-free, emotion-free, and objectively real showcase people's true judgments, offering a new perspective for understanding the real world. As founder Coplan stated, Polymarket is a platform that harnesses the wisdom of the crowd through the market.

Can the Polymarket boom continue?

The encryption prediction platform is not a new industry. In fact, as early as 2018, Augur established the first encryption prediction platform based on blockchain technology. However, due to limitations in technology and the lack of widespread adoption of blockchain at that time, Augur's cumbersome operation steps and unfriendly interactive interface prevented it from truly entering the public eye. It wasn't until the emergence of Polymarket that the encryption prediction platform was able to truly gain popularity in the blockchain industry and become a mature application.

According to the data, Polymarket is attracting widespread attention and participation globally at an unprecedented speed with its unique betting prediction model. Especially during the current US election period, Polymarket has not only become a popular platform for the general public to bet on their voting intentions but has also attracted a large number of investors hoping to profit by accurately predicting the victory of candidates. In the past few months, these active participants have invested hundreds of millions of dollars in Polymarket, directly driving the platform's business scale and visibility to historical new heights.

Dune's latest data further confirms the explosive trend of Polymarket. Since April of this year, Polymarket's trading volume and user numbers have shown explosive growth, especially in July when the assassination attempt on Trump drew global attention. Polymarket, as a representative of prediction markets, was widely reported by global media, further enhancing its visibility and influence. As a result of this event, Polymarket's monthly trading volume in July doubled compared to June, surpassing the $200 million mark, with daily trading volume stabilizing above $20 million and the number of daily active traders exceeding 6,000.

The popularity of Polymarket has not only attracted enthusiastic participation from a wide range of users but has also led some idealists in the encryption field to see it as an arbitrator of truth. They believe that Polymarket, with its decentralized and transparent characteristics, is expected to become one of the main sources of fair information. However, behind the current boom, we must also face the many challenges and potential risks that Polymarket is facing.

Firstly, the lack of continuous capital inflow is one of the key issues regarding whether Polymarket can sustain its future development. As a zero-sum game, the nature of prediction markets determines that they cannot attract ongoing passive capital inflows like stocks, bonds, or encryption in traditional financial markets. This characteristic poses a challenge for Polymarket in maintaining liquidity over the long term, which in turn affects its ability to achieve sustained profitability and growth.

Secondly, the limitation of market liquidity is also an important issue that Polymarket needs to address. Currently, the most popular topics on Polymarket are almost all related to the U.S. elections, which attract the attention of the vast majority of users. However, for most markets, especially those involving non-instant payments and niche topics, there is still a lack of sufficient appeal. This leads to relatively insufficient liquidity in these markets, making it difficult to form an effective market price discovery mechanism, thereby affecting the accuracy and credibility of the predictions.

In addition, the issue of the influence of market participants is also an aspect that Polymarket needs to pay attention to. In prediction markets, a lack of a sufficient number of professional market makers and other market participants may lead to market prices being manipulated or influenced by a few advantageous participants. This not only undermines the ability of prediction markets to provide accurate insights but may also trigger market unfairness and a crisis of trust. For example, some industry insiders often have early access to insider information, allowing them to place large bets in advance and profit at the expense of ordinary users. Therefore, establishing a fair and just regulatory and auditing mechanism is also crucial for the future development of Polymarket.

Finally, Polymarket relies on hot news to create topics for people to bet on predicting directions, which often touches on some socially sensitive events. For example, recently, Polymarket faced criticism for posting several tweets containing inappropriate language (especially the use of the offensive term "Retardio" meaning "intellectually disabled") for marketing purposes. Afterwards, although Polymarket issued an apology regarding the inappropriate language used in the tweets, fired related personnel, and initiated an internal review, it still raised public skepticism. Some media believe that Polymarket is capitalizing on negative events to make money.

Looking at the Future Development of the Cryptocurrency Prediction Market from Polymarket

The popularity of Polymarket undoubtedly reveals the limitless potential of the cryptocurrency prediction market. Looking back, prediction markets mostly remained in the theoretical stage; even when there were practical attempts, they were often closely linked to gambling and even exploited by criminals as tools for money laundering. However, the introduction of Blockchain technology has brought profound changes to prediction markets, and its public and transparent characteristics make the on-chain encryption market easier for ordinary users to accept and trust.

Although Polymarket is not the pioneer of encryption prediction platforms, it is undoubtedly the most mature and influential platform at present. Its success is reflected not only in the rapid growth of user numbers and the continuous increase in trading volume but also in its successful introduction of the encryption prediction market to the general public, injecting new vitality into this field. The rise of Polymarket has shown us new application cases in the Blockchain industry, as well as the unique charm and broad prospects of encryption prediction platforms.

For a long time, prediction markets have been regarded as the holy grail in the field of cognitive technology. As early as 2014, Ethereum founder Vitalik showed great interest in using prediction markets as a governance mechanism. However, for a long time, prediction markets have faced numerous challenges in practical applications, such as irrational participants, insufficient market liquidity, and the lack of betting motivation among holders of "correct knowledge". These issues have been limiting the development of prediction markets.

The emergence of Polymarket has successfully broken this deadlock. It has not only attracted a large number of industry insiders' attention but also demonstrated strong vitality and broad prospects in practical applications. Vitalik himself has used Polymarket to track Sam Altman's board exit event, which undoubtedly adds more authority and influence to Polymarket. At the same time, Packy McCormick, an advisor at a16z Crypto, highly praised Polymarket, believing its page might be the best place to start a day on the internet. This evaluation not only reflects Polymarket's outstanding performance in user experience but also highlights its unique value in information acquisition and decision support.

Richard's perspective provides us with another angle of thought. He believes that the encryption industry should reduce zero-sum games and shift towards offering positive-sum experiences. Prediction markets are one of the best options to fulfill this mission. They can serve as a platform for betting, providing users with entertainment and the possibility of profit; at the same time, they can also become a source of information, helping users make more informed decisions. This dual characteristic gives prediction markets a unique position and value in the encryption industry.

However,