What is Polymarket? Crypto’s Latest Killer App Explained

• Polymarket is being hailed as the latest killer app in cryptocurrency.
• Prediction markets have key features that differentiate them from other markets.
• Some industry leaders argue that this application still has room to grow.

Despite the rapid growth of the cryptocurrency industry in recent years, the reach of applications rarely drives adoption and growth beyond native cryptocurrency users. To date, this elite group of applications has included stablecoins, Axie Infinity, and OpenSea.

But Polymarket, the Polygon-based prediction market that is currently gaining popularity during the US election cycle, looks set to join this elite class in 2024.

In this article, we will learn what Polymarket is and why it is considered the latest killer app in cryptocurrency.

What is Polymarket?

Polymarket is a prediction market platform built on the popular Ethereum scaling solution Polygon. For starters, prediction markets allow users to bet on the outcome of future events. For Polymarket, these events can be anything from sports to pop culture, politics, and war.

In addition to serving as a platform for speculation, many argue that the power of prediction markets like Polymarket can provide more accurate insights than traditional polls. Why? Because people have to actually put money on the table, not just say it, so they have an incentive to bet on what they believe.

Polymarket has grown in popularity in recent months, and has been mentioned several times in prominent media outlets as speculation about the upcoming US presidential election gains momentum. According to Polymarket Vice President David Rosenberg, over $260 million in bets related to the 2024 election have been placed on the platform over the past four years.

Over the past month, Polymarket’s monthly trading volume has jumped nearly 200%, from $81 million to $243 million. At the same time, the platform’s monthly active wallets have jumped nearly 40%, from 24,600 to 34,500, according to Dune’s data at the time of writing.

Polymarket’s recent growth has raised questions about what makes it successful while others have failed.

Why Polymarket Stands Out

Launched in 2020, Polymarket is not the first decentralized prediction market to emerge from the crypto space. Projects like Gnosis and Augur launched in 2015 and 2018, respectively. Nevertheless, Polymarket continues to see mainstream adoption that its peers have been unable to achieve.

One key to Polymarket’s success is its ability to seamlessly onboard users by abstracting away the complexity of creating and managing cryptocurrency wallets. Leveraging Wallet-as-a-Service provider Magic Labs, Polymarket allows users to create an account with a self-custody wallet by submitting an email.

In addition to the ease of account creation, Polymarket stands out for its current fee-free policy. At the time of writing, unlike its competitors, Polymarket does not charge users to buy or sell market share.

Now that you know what makes Polymarket stand out, let’s take a look at how it works.

How to use Polymarket

When you open the Polymarket website, you will be presented with a flood of events for users to bet on. However, to invest in these events, users must log in or sign up to the platform using their email or existing cryptocurrency wallet.

After you have your wallet, the next step is to fund your account with USDC. As of this writing, users can fund their Polymarket account with USDC through a number of methods, including the mainstream payment platform PayPal. This is where the fun begins.

Once your account is funded, you can now speculate on the outcome of the chosen event. Users can place bets by simply buying shares based on their predicted outcome. Share prices range from $0.01 to $1. The price also represents the probability of something happening as the market decides.

For example, a Polymarket poll on the 2024 presidential election winner puts a “yes” bet on Donald Trump at 64 cents per share, suggesting that the market believes the former US president has a 64% chance of winning the election. Once the result is confirmed, your stock will either rise by $1 or plummet to zero, depending on whether you predicted the correct outcome, as confirmed by the smart contract.

Meanwhile, in Polymarket, since the bets are not finalized, you can sell the stocks to realize profits or prevent losses before the outcome is determined.

In addition to immediate market buy orders, you can also place limit orders on Polymarket if you think the stock is too high. These limit orders may have a time limit that will close the order if it is not filled within a specified window.

The platform’s marketplace also features a comments section where users can discuss their views.

Despite Polymarket’s growing adoption and rave reviews from industry leaders in recent months, several feel the application could be further streamlined to attract more users.

There is still room for improvement

In December 2023, 1confirmation founder Nick Tomiano argued that Polymarket could still appeal to crypto degenerates and non-natives, and that introducing things like points, tokens, and leverage would help attract degenerates, while also arguing that more user experience improvements were needed for new crypto users.

Tomiano isn’t the only one who sees room for Polymarket to grow. On July 9, Ethereum co-founder Vitalik Buterin called on the Ethereum network to implement changes like ERC-3770 and ERC-7683. This would allow Polymarket to seamlessly accept and convert deposits from networks other than Polygon, as well as support popular Web 2.0 payment methods like card payments, Google Pay, and Apple Pay.