Taking stock of concerns surrounding Polymarket: the hotter it gets, the cooler we should be.

Author: Yangz, Techub News

Polymarket is undoubtedly the most prominent Web3 application behind the US election. While major mainstream media such as The Wall Street Journal were still predicting the results of key swing states, this Decentralizationprediction market founded by 26-year-old 'prodigy' Shayne Coplan had already made the call for 'Trump's victory'. In the days following the 'settling of the dust' in the election, there has been a burst of discussion within the community about whether Polymarket belongs to the Ethereum ecosystem, hoping to restore some 'face' for the Ethereum ecosystem amid the popularity of Polymarket.

Despite Polymarket being highly sought after by many pros such as V God, being seen as a 'truth machine,' the platform is also beset by various controversies. This article aims to take stock of the various doubts surrounding Polymarket, hoping for a rational perspective on this platform. After all, the more fiery it is, the calmer one should be.

Founder and Investor's Political Stand

First, there are questions about the political positions of Polymarket founder Shayne Coplan and its main investor Peter Thiel themselves.

"New York Times" reporter Teddy Schleifer once posted a photo on Twitter on July 20th. In the photo, Shayne Coplan, with curly hair, stands out among a group of Republican representatives wearing suits and backcombed hair. Other people in the photo include Donald Trump Jr., Omeed Malik, Shervin Pishe, and other Trump supporters. Based on the timing, the photo should have been taken during the Republican National Convention.

In addition to Shayne Coplan himself, the main investor in this prediction market platform, Peter Thiel, the co-founder of PayPal and the founder of Founders Fund, who is also a known supporter of Donald Trump, has attracted questions about its 'political bias'.

Despite Shayne Coplan's response 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 or control, can this response really dispel doubts in people's minds?

There are actually some reports that cannot be ignored on this matter. According to Politico and its reporter Daniel Lippman, Shayne Coplan not only appeared at the Republican National Convention, but also held a post-convention party for the Democratic National Convention. In addition, Coplan also took a photo with Democratic vice presidential candidate and Minnesota governor Tim Walz at a Harris campaign fundraising event.

Therefore, in addition to the possible factor of 'political stance', Shayne Coplan's actions may also be just to promote Polymarket, pure 'advertising tactics'. As reported by Bloomberg, Polymarket has spared no effort to stand out. The platform once distributed baseball caps with its own brand to participants during the Republican National Convention and hired people (with a reward of $1050) to act as human billboards for promotion. Earlier this year, Polymarket also posted boxing-themed champion posters in Manhattan to promote Trump's election odds against Biden. In addition, the platform announced the hiring of renowned political poll analyst Nate Silver as an advisor in July.

"Betting with real money may also be manipulation of capital"

In addition to questioning the founder's political stance, the market also raised doubts about whether there is 'capital manipulation' in the Polymarket election prediction market. On October 18, The Wall Street Journal published an article claiming that the Trump's lead on Polymarket is actually a capital 'stunt'. It pointed out that this surge may be a 'mirage' caused by four Polymarket accounts. Miguel Morel, CEO of blockchain analysis company Arkham Intelligence, also stated after review that these 4 accounts belong to the same entity. For a while, the market was in an uproar.

However, according to the latest reports, the "Whale" is an investor from France who goes by the name Théo, and in an interview with the Wall Street Journal, he mentioned that he had previously lived in the United States and worked as a trader in several banks. Théo stated that there was no "political stance" behind his massive bets, only for "making money", and that the majority of the invested funds are "available liquid assets". In addition, Polymarket also stated that after conducting an investigation, the company concluded that the trader's bets were based on "personal views on the election", and no information was found to indicate that the user was manipulating or attempting to manipulate the market.

"注水的volume"

After officially 'excluding' the possible 'capital manipulation' doubts, is Polymarket really more reliable than traditional polls just because it is a 'real money bet,' as Elon Musk said?

In fact, the public has also raised doubts about the actual volume of the platform. Blockchain risk analysis company Chaos Labs released a report pointing out that about one-third of the volume in presidential predictions may belong to Whipsaw trading, while Inca Digital found that the total presidential election prediction volume reported on the Polymarket website does not match the on-chain data. Inca Digital stated that the actual trading volume of the presidential election prediction market is approximately $1.75 billion, while Polymarket reported a figure of $2.7 billion.

I have not yet found a response from Polymarket on this matter. Whipsaw trading is actually very common in Web3 applications. In addition to the platform itself may manipulate data for a more glamorous appearance, the charm of 'Airdrop' also attracts many Degens to come early 'lying in ambush', forming a false prosperity. In September of this year, The Information cited sources as reporting that Polymarket is considering raising over $50 million through token issuance, but Polymarket has not made a final decision, and there is no clear timetable for token issuance.

If the 'Whipsaw Trading' is no longer a surprise, should we also treat Polymarket, which is laying out the prediction market track, in the same way? In my opinion, this approach actually jeopardizes the essence 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 similar, they will make random choices. However, if there is a significant difference in the odds, due to the characteristics of degens, they may think a little more and invest in the side that has only a 1% chance.

"On the surface, it complies with regulations, but in reality, it acts wantonly."

In January 2022, Polymarket was fined $1.4 million by the Commodity Futures Trading Commission (CFTC) for operating without being registered in the United States. As part of the settlement protocol, the company has committed to gradually ceasing its services in the United States and prohibiting access for U.S. users.

However, the fact is that in addition to a large number of American users still being able to access the website through means such as VPN, according to Bloomberg, Meta's ad library shows that the owner of Polymarket, Blockratize, recently spent about $269,875 on Facebook and Instagram to target millions of American users with election ads. In addition, Polymarket's Senior Director of Growth, Armand Saramout, sought sponsorship protocol with American social media KOLs in September. Over the past few weeks, Instagram influencers with a large number of followers have been using tags such as #PMPartner and #PolymarketPartner to post sponsored content for Polymarket. Although a Polymarket spokesperson confirmed that this was not intended to stimulate transactions by American visitors, it still gives the impression of "apparent compliance, but in reality, acting wantonly."

Summary

The emergence of Polymarket is definitely a major Favourable Information for the Web3 industry, and we also look forward to this Decentralizationprediction market platform becoming, as Coplan said, an "alternative news source" or the "future of media." However, what Polymarket needs to consider now is that the dust has settled on the U.S. election, so how will it develop without such a big hot topic? Perhaps launching Token will be one of the ways to maintain rise, but even if Token is launched, please do not forget the mission of providing the public with more accurate and real-time event predictions.