Trump ignites Polymarket, is the future of encryption prediction market bright?

Author: Daniel Li

In recent years, encryption prediction platforms, as a new force in the blockchain industry, are rapidly rising and widely followed. This unique market form allows users to buy and sell shares related to future event outcomes through collective wisdom, thus predicting the direction of events. It not only provides investors with a new investment channel, but also valuable data resources for research institutions. According to industry reports, the scale of encryption prediction platforms is experiencing an explosive rise, and is expected to maintain a high-speed rising trend in the coming years.

Among the numerous prediction platforms in the Crypto sector, Polymarket stands out with its unique operating mechanism and timely marketing of hot political events. As a Decentralization 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 on-chain using Smart Contracts, significantly reducing Money Laundering 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 interaction experience, making it the largest prediction platform in the Crypto sector.

This article will delve into the operation mechanism and principles of Polymarket, while analyzing the industry’s new trends in encryptionprediction market, aiming to provide readers with a comprehensive and in-depth encryptionprediction market insight.

01\Polymarket: Understanding the Real World through Betting

Polymarket, a Decentralization prediction market platform based on Blockchain technology, has recently begun to gain recognition in the public eye. The platform was founded by Shayne Coplan in 2020, and its birth is closely related to Coplan’s profound insights during the epidemic. Faced with a plethora of uncertain opinions and views in the market, it is often difficult for both sides to persuade each other, exacerbated by the proliferation of incorrect information and the influence of Algorithms pursuing profits, making it increasingly difficult for people to see the truth. Therefore, Coplan founded Polymarket with the aim of allowing people to understand what is happening in the real world more accurately through a new way.

The theoretical basis of Polymarket comes from Hayek’s famous paper ‘The Use of Knowledge in Society’. Hayek believes that economic incentives are the key to driving people to have a more accurate understanding of uncertainty. When economic incentives are at work, people tend to read longer and better sources of information, think more deeply, and try to invest their money in more likely actual outcomes. Coplan puts this theory into practice, simply put, by understanding the real world through betting.

Open the Polymarket website, which prominently displays globally followed hot news events on the homepage, such as the likelihood of Trump’s victory in the upcoming presidential election, the potential conflict between Musk and Zuckerberg, and the expected number of Fed rate cuts this year. Users can select specific markets based on their personal interests and purchase ‘outcome shares’ representing potential results of these events. The market price of these shares reflects the collective perception of the likelihood of the events, providing users with an intuitive reference. Before the market resolution, users have the flexibility to sell their shares at any time, usually without paying high Money Laundering fees. Once the results of the relevant events are officially announced, users with accurate predictions have the right to redeem their shares at a price of $1 per share, while users with inaccurate predictions will lose the value of their shares. It is worth noting that all trading and Settlement on the Polymarket platform are automatically executed through smart contracts, ensuring fairness, transparency, and security of the transactions.

By introducing a reward and punishment mechanism, Polymarket encourages each user to take responsibility for their own views, thereby making the statistical data on the platform more reflective of the real market situation. Compared to previous platforms or social media, Polymarket’s prediction results are closer to the truth. For example, in the case of room-temperature superconductors, while some authoritative media are skeptical, internet celebrities confidently confirm their achievement, even fabricating evidence. Polymarket, on the other hand, provides a more rational prediction with a true-to-false 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 access to information is often restricted. These institutions may not be able to remain objective due to their vested interests, and social platforms also recommend information based on user interests, leading to an echo chamber effect. Polymarket, as a decentralized prediction market platform based on blockchain technology, maintains fairness and justice, providing an opportunity to change public opinion. Its characteristics of being politically correct, emotionless, and objective show people’s true judgments and provide a new perspective for understanding the real world. As founder Coplan said, Polymarket is a platform that uses the market to tap into the wisdom of the masses.

Can the Polymarket craze 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, at that time, due to technical limitations and the lack of popularity of blockchain, Augur’s cumbersome operation steps and unfriendly user interface prevented it from truly entering the public’s vision. It was not until the emergence of Polymarket that the encryption prediction platform was popularized in the blockchain industry and became a mature application.

According to the data, Polymarket is attracting a wide range of unprecedented follow and participation on a global scale with its unique betting prediction model. Especially during the current US election, Polymarket has not only become a popular platform for the general public to bet on their voting intentions, but also attracted a large number of investors hoping to profit from accurate predictions of candidate victories. Over the past few months, these active participants have invested billions of dollars on Polymarket, directly driving the platform’s business scale and visibility to historic new heights.

The latest data from Dune further confirms the booming trend of Polymarket. Since April this year, Polymarket has seen a surge in both volume and user numbers, especially in July when the global attention caused by the Trump assassination incident propelled Polymarket, as a representative of the prediction market, to be widely reported by the global media, further enhancing its visibility and influence. As a result of this incident, Polymarket’s monthly volume in July doubled compared to June, breaking the $200 million mark, with daily volume stabilizing at over $20 million and daily active traders exceeding 6,000.

The popularity of Polymarket has not only attracted the enthusiastic participation of a large number of users, but also led some idealists in the encryption field to see it as an arbitrator to reveal the truth. They believe that with its Decentralization and transparency, Polymarket is expected to become one of the main sources of fair information. However, behind the current popularity, we also have to face the many challenges and potential risks that Polymarket faces.

Firstly, the lack of sustained capital inflow is one of the key issues for the future sustainability of Polymarket. As a zero-sum game, the nature of prediction markets determines that they cannot attract continuous passive capital inflow like stocks, bonds, or cryptocurrencies in TradFi markets. This characteristic poses a challenge for Polymarket in maintaining liquidity in the long run, thereby affecting its ability to sustain profitability and growth.

Secondly, market Liquidity constraints are also an important issue that Polymarket needs to address. Currently, the most popular topics on Polymarket are almost all related to the US presidential election, which attract the vast majority of users’ follow. However, for most markets, especially those involving non-immediate payment and niche topics, they still lack sufficient attractiveness. This results in relatively insufficient Liquidity for these markets, making it difficult to form an effective market price discovery mechanism, thereby affecting the accuracy and credibility of the prediction results.

In addition, the issue of market participants’ influence is also an aspect that Polymarket needs to follow. In a prediction market, the lack of a sufficient number of professional market makers and other market participants may result in the market price being controlled or influenced by a few participants who have an advantage. This not only weakens the ability of the prediction market to provide accurate insights but may also lead to market unfairness and a crisis of confidence. For example, some insiders in the industry often have access to insider information in advance and can make large bets ahead of time to profit from ordinary users. Therefore, it is crucial for the future development of Polymarket to establish a fair and just regulatory and auditing mechanism.

Finally, Polymarket relies on hot news to create topics for people to bet on the direction of predictions, so it often touches on some socially sensitive events. For example, recently, Polymarket was criticized for marketing using several tweets containing inappropriate language (especially the offensive term ‘Retardio’ meaning ‘mentally slow’) from its official X account. Although Polymarket apologized for the inappropriate use of language in the tweets, dismissed the relevant personnel, and launched an internal review, it still raised public questions. Some media believe that Polymarket is using some bad events to make money.

03\From Polymarket, the future development of encryptionprediction market

The popularity of Polymarket undoubtedly reveals the unlimited potential of the prediction market. Looking back, the prediction market mostly stayed in the theoretical stage. Even with practical attempts, it was often closely associated with gambling, and even used by criminals as a tool for Money Laundering. However, the introduction of blockchain technology has brought profound changes to the prediction market, and its characteristics of openness and transparency make on-chain encryption markets more accessible and trustworthy to ordinary users.

Although Polymarket is not the creator of the encryption prediction platform, it is undoubtedly the most mature and influential platform at present. Its success is not only reflected in the rapid rise in the number of users and the continuous increase in volume, but also in its successful push 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 the encryption prediction platform.

For a long time, prediction markets have been regarded as the Holy Grail of cognitive technology. As early as 2014, Vitalik, the founder of Ethereum (ETH), expressed a strong interest in using prediction markets as a governance mechanism. However, prediction markets have faced many challenges in practical applications, such as irrational participants, insufficient market liquidity, and a lack of motivation for holders of “correct knowledge” to place bets. These issues have been constraining the development of prediction markets.

The emergence of Polymarket has successfully broken this deadlock. It has not only attracted a large number of industry professionals to follow, but also demonstrated strong vitality and broad prospects in practical applications. Vitalik himself has used Polymarket to track Sam Altman’s board of directors out event, which undoubtedly adds more authority and influence to Polymarket. At the same time, Packy McCormick, a consultant at a16z Crypto, highly praised Polymarket, believing that its page might be the best place to start the 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 perspective to consider. He believes that the encryption industry should reduce zero-sum games and shift towards providing positive-sum experiences. Prediction market is one of the best choices to fulfill this mission. It can serve as a betting platform, offering users the possibility of entertainment and profit, while also serving as a source of information to help users make wiser decisions. This dual nature gives prediction market a unique position and value in the encryption industry.

However, we must also be aware of the challenges that encryption and prediction market face in future development. The uncertainties of regulatory policies, prevention of compliance risks, and the construction of market ethics are all issues that we need to follow closely. Only by ensuring compliance, fairness, and transparency can encryption and prediction market achieve healthy, stable, and sustainable development. This requires joint efforts and continuous exploration within the industry.

04\Check the encryptionprediction market platforms worth following now

In the encryption prediction market arena, in addition to Polymarket, there are several platforms that stand out with their unique operating mechanisms and respective advantages, becoming the focus of follow in the market. These platforms not only provide innovative prediction market models, but also enhance transparency and credibility through blockchain technology, attracting an increasing number of long encryption enthusiasts and investors to follow. Here are several current encryption prediction market platforms worth special attention:

Augur

As a pioneer in the blockchain prediction market, Augur has been committed to promoting the development of the field since 2014. Its operating mechanism is community-driven, allowing users not only to participate in betting, but also to create their own markets, significantly increasing market participation and customization. Augur operates using the native token REP, which plays a crucial role in reward distribution, market creation, and dispute resolution, further enhancing market transparency and credibility. In response to the scalability challenges of the Ethereum network, Augur has launched the Turbo version, utilizing the Polygon network to improve transaction efficiency and scalability, significantly enhancing user experience.

In recent years, Augur platform’s functions have been continuously improved and the community has also been expanding, attracting more and more encryption enthusiasts and investors. However, its community-driven model may also lead to a certain degree of artificial influence on market results, which is a risk that investors need to pay attention to when participating.

Gnosis

Gnosis is a comprehensive blockchain ecosystem that covers a range of infrastructure tools, including prediction markets, decentralized trading, wallet services, and more. Its operation mechanism revolves around the GNO Token, which tightly connects users with the platform through governance and staking mechanisms. To address the scalability challenges of Ethereum, Gnosis has developed its own layer 2 solution called Gnosis Chain, providing robust support for applications like prediction markets built on Ethereum.

Gnosis’s development model focuses on the comprehensiveness and functionality of the ecosystem, aiming to provide users with an integrated and convenient blockchain environment. Currently, Gnosis is gradually expanding the application scope of its ecosystem to meet the needs of more long users. However, due to the complexity of its ecosystem, Newbie users may need some time to familiarize themselves with and master its various functions and services.

XRADERS

XRADERS is a market prediction and expert opinion sharing platform for Decentralization, which utilizes blockchain technology for transparent data recording and trust building. Its operating mechanism combines social price prediction, gamification elements, and community-driven cycles, providing users with a secure and reliable environment for interaction. XRADERS provides carefully curated expert insights, offering actionable information for investors, and ensures transparency and integrity through a Decentralization voting system.

In recent years, XRADERS has established partnerships with long well-known projects, such as UXLINK, SecondLive, DIN, etc. Its core gameplay Guess2Earn and Decentralization voting system have also attracted a large number of users. In addition, XRADERS has successfully completed seed round financing, attracting the participation of long top encryption investors and institutions. However, due to its Decentralization feature, there may be some subjectivity and uncertainty in the information on the platform, and investors need to carefully evaluate when making decisions.

PredictIt

PredictIt is a non-profit research project operated by Victoria University of Wellington in New Zealand. It has obtained a special exemption from the CFTC at the federal level in the United States, allowing it to operate legally in some states in the United States. The operation mechanism of PredictIt is relatively simple and clear, mainly relying on users’ prediction and betting on market events. In order to comply with regulatory requirements, PredictIt restricts the amount of investment by users. Currently, the event markets on PredictIt cover long fields such as politics, economics, and sports, attracting a large number of users to participate. However, due to its non-profit nature and regulatory restrictions, PredictIt may face certain challenges in market promotion and commercialization. At the same time, investors also need to pay attention to compliance and investment risks when participating, ensuring that their own rights and interests are not harmed.