What is Polymarket?

What is Polymarket?

Polymarket is a decentralized prediction market platform that enables users to trade on the outcomes of real-world events, including political elections or sports tournaments, by buying and selling shares in potential outcomes.

In the 2024 US presidential election, Polymarket accurately predicted Donald Trump's victory over Kamala Harris, contrasting with many traditional polls that favored Harris or claimed the race would be very close to call. During the campaign, Polymarket attracted over $4 billion in volume from over 30,000 active users.

The platform’s accuracy stems from aggregating diverse user insights, incentivizing informed predictions, and reflecting real-time sentiment shifts. Built on the Polygon blockchain, Polymarket uses USDC for trading and payouts, as it’s one of the most trusted and safest stablecoins.

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How Does Polymarket Work

Polymarket operates on the Polygon blockchain, allowing users to trade shares on the outcome of events using a peer-to-peer system that sets prices through dynamic user demand and supply.

• Market Creation: Polymarket’s team creates markets with community input, focusing on high-demand events with credible resolution sources.
• Price Calculation: Share prices on Polymarket are set by users through peer-to-peer trades, starting from the midpoint of buy-sell offers; prices range from $0 to $1, representing probabilities of event outcomes.
• Trading: Users buy "Yes" or "No" shares, with prices changing as new trades occur, creating an evolving market probability based on the latest sentiment.
• Re-selling Shares: Users can re-sell shares they’ve previously bought, adjusting their position by responding to evolving event probabilities or taking early profits if prices rise.
• Liquidity and Profit Calculation: Liquidity pools back the trading of shares, and each winning share pays out exactly $1 upon resolution; profits come from the difference between purchase price and $1.
• Resolution Process: When a market concludes, Polymarket uses UMA’s Optimistic Oracle to confirm outcomes; winning shares are paid out, and losing shares become worthless.
• Disputes: If a user disagrees with a proposed outcome, they can dispute it during a 2-hour challenge window by posting a bond; disputes are reviewed, and if the challenger wins, they receive part of the bond as a reward.

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How to Bet on Polymarket

To bet on Polymarket, users need to create an account, fund it with USDC, and use the order book to buy or sell shares in specific outcomes.

1. Sign Up on Polymarket: Create an account by connecting your crypto wallet, such as MetaMask or Coinbase Wallet, to Polymarket, enabling a secure connection for trading.
2. Deposit Funds: Purchase USDC (USD Coin) on a crypto exchange like Coinbase, then transfer it to your connected wallet and deposit it into your Polymarket account.
3. Choose a Market: Navigate to the market page and select an event you’re interested in trading on, such as political elections, sports, or current events.
4. Place a Market or Limit Order: For immediate trades, use a market order, or set a specific price using a limit order if you prefer a particular buy/sell price in the order book.
5. Manage Open Orders: Track open orders in the portfolio section, where you can cancel or adjust limit orders before they are filled.

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Calculating Polymarket Profits

Users can buy as many shares as they want on any potential outcome and sell them if there are open buys, so keeping track of your profits and losses is important.

1. Sell Shares Early (Optional): Sell shares anytime before resolution to secure profits or cut losses, either instantly at the current bid price or by placing a limit order.
2. Profit Calculation: Once the market is resolved, winning shares are paid out at $1 per share, with profit depending on the difference between the purchase price and $1.

We've included five example scenarios and how your Polymarket calculation would look in the graph below.

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Polymarket Fees

Polymarket does not charge direct trading fees on its platform, allowing users to buy and sell shares without additional costs. However, users may incur network fees when transferring USDC to and from their wallets on the Polygon network.

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How to Bet on Polymarket in US

Polymarket is restricted in the US due to regulatory concerns, which has led to legal action, including an FBI investigation and scrutiny by the DOJ. Still, some users circumvent these restrictions by accessing the platform through VPN services, allowing them to bypass restrictions and successfully bet on Polymarket while residing in the US.

You can find Polymarket alternatives in our guide on the top 5 decentralized prediction markets in 2024.

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Largest Historical Polymarket Bets

Polymarket has hosted some of the most high-stakes prediction markets globally, drawing billions in volume and influencing public perception on major events.

• Presidential Election Winner 2024: $3.68 billion in volume; highest wager on Donald Trump at $1.53 billion. One week before election, Polymarket projected Trump as the winner.
• Popular Vote Winner 2024: $628.16 million in volume; highest wager on Kamala Harris at $163.78 million. Polymarket falsely predicted Harris as the popular vote winner.
• 2020 Presidential Election: Polymarket predicted Joe Biden as the winner, drawing interest and establishing the platform’s reputation in political betting.
• 2016 Presidential Election: Although Polymarket wasn’t yet established, prediction markets heavily favored Hillary Clinton, which they got wrong at the time.
• Ethereum ETF Approval (May 2024): The platform saw decent bets placed on the approval timeline, with outcomes influenced by last-minute regulatory decisions.

Additionally there are some interesting ongoing events right now:

• Super Bowl Winner 2025: Active bets on which NFL team will take the championship.
• Champions League Winner: Predicting the top European club for the season.
• Jake Paul vs. Mike Tyson Fight: Speculation around the outcome of this anticipated boxing match.
• Bitcoin to Hit $100K in 2024: Ongoing bets on whether Bitcoin will reach 6-digits by Dec 31, 2024.

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Is Polymarket Legal?

Polymarket operates under Blockratize, Inc., a registered company based in New York City. While it is a legitimate platform, it has encountered notable regulatory challenges over the years.

In January 2022, the Commodity Futures Trading Commission (CFTC) fined Polymarket $1.4 million for operating unregistered markets and required it to stop offering certain contracts in the US, prompting Polymarket to restrict US access.

In November 2024, France's National Gaming Authority (ANJ) considered banning the platform after a French trader known as "Théo" made $85 million wagering on Trump in the 2024 US election.

Shortly afterward, the DOJ launched an investigation into Polymarket's regulatory compliance, leading to an FBI raid on the Manhattan home of CEO Shayne Coplan, where his electronic devices were seized.

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Who Owns Polymarket?

Polymarket was founded in 2020 by Shayne Coplan, who grew up on Manhattan’s Upper East Side where the company is now based. At just 22, Coplan launched the platform from a makeshift office in his bathroom.

He once shared a photo of his setup with the caption: “2020, running out of money, solo founder, HQ in my makeshift bathroom office. Little did I know Polymarket was going to change the world.”

Also, an interesting fact is that he was an early entrant in the crypto space, rumored to be the youngest buyer in Ethereum's 2014 token sale, acquiring coins at 30 cents each.

A few years later, in May 2024, he secured $70 million in funding from investors, including Ethereum co-founder Vitalik Buterin and Peter Thiel's Founders Fund, underscoring strong confidence in Polymarket's operations.

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Bottom Line

Polymarket is the world's largest prediction market and the crypto’s most impactful innovation in years, drawing massive attention from mainstream media for its accuracy in calling Trump as the Presidential Election winner in 2024.

While some see it as a gambling product in disguise, Polymarket is a true marketplace, allowing users to buy and sell positions rather than just betting on outcomes. Additionally, it's an amazing tool for hedging the risk of other investments if used properly.

Post-elections, open interest in trading might be dropping however public interest remains high, especially amid legal scrutiny and anticipation of a potential Polymarket token launch in 2025.