Web3 prediction platform Polymarket is experiencing unprecedented growth, fueled largely by the upcoming 2024 US presidential election.
The platform has already achieved its highest trading volumes and user participation to date this month, solidifying its status as a significant player in the prediction market space.
Consecutive record growth
Polymarket’s trading volume hit $390.6 million in August, marking the fourth consecutive month of record-setting figures for the platform, based on Dune Analytics data.
The number of active users on the platform also reached a new milestone, with 53,981 traders engaging this month. Additionally, open interest on the platform peaked at $103.3 million on Aug. 22, demonstrating the increased interest in prediction markets.
A substantial portion of this activity is driven by election-related markets, which accounted for 87.6% of Polymarket’s trading volume over the past week. In mid-July, these markets were even more dominant, representing 93.2% of the platform’s weekly volume.
While the presidential election is the primary driver, Polymarket’s non-election markets are also showing growth. Over the past week, 19,135 users traded in non-election markets, a significant increase from the 424 users recorded in early May.
These markets achieved a weekly volume peak of $28.3 million in late July, though this has since decreased to $17.8 million.
Praise and criticism
The surge in activity on Polymarket has sparked discussions about the role of prediction markets in public discourse, with some praising the platform for its potential to serve as a social tool while others argue that it treads too close to gambling for comfort.
Ethereum co-founder Vitalik Buterin praised prediction markets like Polymarket for their potential as “social epistemic tools.” He argued that these platforms offer a unique way for the public to engage in collective forecasting about significant events.
According to Buterin, prediction markets provide insights that are less susceptible to the editorial biases commonly found in traditional media and social media platforms. He also highlighted the potential use of these markets in governance, suggesting that they can contribute to more informed decision-making processes.
However, critics expressed skepticism about Buterin’s optimistic view. They argued that Polymarket’s election-related markets resemble traditional gambling more than they do unbiased forecasting tools.
The concern is that market movements on Polymarket closely mirror those on mainstream betting platforms, indicating that some participants may be using the prediction markets primarily for arbitrage opportunities between the two mediums.
This raises questions about whether the outcomes and odds generated by these markets are genuinely independent or if they are influenced by similar biases that Buterin sought to avoid. Critics suggest that while prediction markets offer a new approach to forecasting, they may still be subject to the same limitations as traditional betting markets.
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