Big news all around the world at the moment is the imminent US Presidential Election and one of the references I’ve seen pop up a few times now in alt-media reporting is the Prediction Market called Polymarket which appears to be getting some serious traction. Last week I decided to check it out.
Source
The first thing I noticed on Polymarket is that there are a LOT of political markets and the big one (as you can see from the screenshot above) currently has over $2 Billion US Dollars worth of Volume Traded. To put this into context, my favorite Betting Exchange (Betfair) currently shows a volume of just $185 Million US Dollars on the US Presidential Election market so Polymarket is blowing it away by a factor of x10!
Obviously people like to bet on elections for all sorts of different reasons, but what’s interesting is that US citizens are NOT supposed to make US Election bets on Polymarket...so this volume it entirely international. Whether you believe that or not is up to you but my point is that this market on Polymarket IS restricted in the country it's focused on and it’s still blowing the competition away.
I did a bit of a deep dive because Polymarket is supposed to be decentralized and run on the Polygon Blockchain. I signed up by linking my Metamask Wallet and I deposited some USDC (Polygon) Stablecoin to have a bet on one of the NFL games. I wanted to see how liquid the markets were “In Play” and whether I could potentially use it for my regular betting. The results were good. The market stayed liquid with a minimal spread and I was able to trade a few times while the game was on. So Polymarket does pass the “Usability Test” for me as a Betting Exchange.
Having a deeper look it does appear like there is some Decentralized Oracle Technology underneath that is used to effectively result markets. It uses a UMA Optimistic Oracle Protocol which basically involves someone posting a Bond when attempting to resolve a market and then if they are challenged by someone else posting a bond then the loser sacrifices their bond. That’s obviously an over-simplification but the incentive appears to be there to get resolutions correct and quick.
To quote the Polymarket Documentation in a nutshell it describes itself as :-
"hybrid-decentralized wherein there is an operator that provides off-chain matching/ordering services while settlement/execution happens on-chain, non-custodially according to instructions provided by users in the form of signed order messages."
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So it’s not fully decentralized but I do think it’s a big step in the right direction. The markets aren’t yet able to be created by users but I can see a lot of the building blocks are there and the technology is definitely advancing. For now I won’t be able to take a punt on my favourite sports (rugby league and cricket) using Polymarket but it might not be too long now until these markets can be user created and I can play the role of Market Maker. Watch this space...
I haven't taken the step yet to try out polymarket and from what I understand you can't invest in a token of the platform and there also aren't any fees?
When it comes down to prediction markets it kind of feels like the US Elections is the only real thing they are used for and unless they drastically change their interface I doubt many sports bettors will adopt it. Still very impressive volume numbers though! If you are looking for an exchange to place crypto bets, I would say test out sx.bet, their fees are turned off so if you offer bets you potentially can get great odds.
Good tip. Will check out sx.bet though from first glance it does look light on liquidity.
I'm not 100% on the business model for polymarket. They use UMA so in some ways you might consider UMA to be a governance token of some kind when it comes to resolving events.
From what I understand, sx themselves is acting as a market maker to bring some initial liquidity but still with odds that have quite some juice on them. With feels turned off right now, sx is pretty much betfair with no commission but at the same time with a limited number of users. It's the classic catch22 for everything that tries to be a betting exchange. liquidity is needed to bring users but users are needed to bring liquidity.
I never even heard of UMA, good info to know they are using that.
Does Polymarket do know your customer/ anti money laundering checks? I have not checked that out yet.
I know Betfair introduced premium charges on winners many years ago and is restricted from operating in many countries but the original idea of peer to peer gambling was such a good one to give value to a regular customer whose alternative was a bookmaker.
I didn't have to do any KYC stuff. It might kick in for larger accounts / stakes, but I think the potential is here for decentralized (unrestricted) peer-to-peer gambling if the technology continues to evolve in this space.
I like the sound of that!
Is it tied to Polygon at all, or is that just the name of it?
Yes, it runs on the Polygon (Matic) Blockchain.
That’s really insane…..
Soooo
This presidential bet now...
If those who bid on trump win, how much would they win with 39.8 cents
You buy shares. So with 39.8 cents you'd get maybe 0.66 shares of YES. Then if he wins the share value goes to 100 cents so your 0.66 shares of yes would be worth 66 cents.
I see...
What’s crazy bet!
I guess a little of people will bet on Trump because he’s likely to be the winner but who knows?
We may be shocked
How are the prizes distributed to the winners? how much for each one?
I don't understand your question.
The prize is distributed among all the users that voted for the final winner? or how it is distributed?