What is Polymarket?

Polymarket is an online peer-to-peer prediction market platform that allows users to trade shares based on the outcomes of real-world events. It leverages blockchain technology and smart contracts to offer a trustless, transparent,and user-friendly way to speculate on future events in sports, politics, pop culture and science.

An overview of Polymarket and its history

​​Polymarket was founded by Shayne Coplan in 2020 and was built on the Ethereum blockchain. It launched its beta version in the same year and allowed users to trade on a variety of topics. It also raised $4 million in a Series A funding round with investors including Polychain Capital, CoinFund and other notable names in the blockchain space.

Polymarket gained significant traction during the 2020 U.S. Presidential Election, attracting people interested in betting on election outcomes and saw rapid growth in its user base and trading volume. However, in 2021 the platform faced scrutiny from the Commodity Futures Trading Commission over concerns related to offering unlicensed binary options.  Polymarket later settled with the CFTC in early 2022, agreeing to pay $1.4 million, wind down the non-compliant markets on its website, and "cease and desist from violating the CEA and CFTC regulations, as charged."

As part of this settlement, Polymarket imposed a block to prevent U.S. users from trading on the platform while still allowing them to view information markets.

Despite regulatory challenges, Polymarket continued to grow. In 2024, the platform raised a $45 million Series B funding round led by Peter Thiel’s Founders Fund, with participation from notable investors including Ethereum co-founder Vitalik Buterin. The platform also hired veteran futures industry executive Richard Jaycobs to explore U.S.-regulated activities and brought on well-regarded statistician and election commentator Nate Silver as an advisor.

In 2024 alone, more than $400 million of trades occurred on Polymarket, with significant activity driven by the U.S. elections.

Functions and features

Polymarket allows users to create markets on any event by specifying the outcome options and initial liquidity, decentralizing the process and allowing for a wide variety of markets. Users can buy and sell shares in the outcomes of events, with prices determined by supply and demand, reflecting the collective wisdom of the crowd. Users can make predictions on a wide range of topics, from who the next U.S. President will be to the outcome of the Super Bowl to who the next James Bond actor will be, and much more.

Polymarket displays the odds of an event occurring at a dollar value. For instance, if the likelihood of former president Donald Trump being re-elected in 2024 was at 70%, Polymarket would display this as $0.70. Once the event is completed, shares on the correct side resolve to $1, so a share bought at $0.70 would then be worth $1. Shares on the wrong side are worth nothing.

Polymarket also allows its users to place limit orders on certain events. Using the election example, a user could place a limit order for a Trump presidency at $0.40, hoping for some event or chain of events to occur prior to the election that would see Trump’s chances reduced. If this happened, the user’s order would get filled at $0.40 rather than $0.70, and thus increase the potential return of the bettor if they turn out to be correct.

Polymarket competitors

Polymarket’s main competitors include Augur, one of the earliest decentralized prediction markets, also built on Ethereum, which allows users to create and trade on the outcomes of events using a similar decentralized model. Another competitor is Gnosis, an Ethereum-based prediction market platform focused on providing the infrastructure for creating prediction markets and has developed various tools and applications to support this ecosystem. Additionally, PredictIt is a more traditional, centralized prediction market platform focused on political events, operating under a no-action letter from the CFTC, which provides a regulated framework.

Polymarket has seen continued growth, especially over the last few months, with the number of active monthly traders seeing a steady rise.

Polymarket’s monthly traded volume has seen similar growth.