Prediction markets have always been around. These are essentially markets where people can trade on the outcome of certain events. Traditionally, there has always been a middleman in the deal; that’s until blockchain technology took off. Today, prediction markets are seeing a serious uptick across its major players. Decentralized platforms powering prediction markets such as Polymarket and Augur have been posting some record numbers of late. Now, let’s take a look at how crypto prediction markets can be benefited from elections. Why did the market receive enormous support in the recent U. S. Presidential Election?
Polymarket placed a question on their platform, “Will Trump win the 2020 U.S. presidential election?” and the results have been unprecedented. As of this article’s writing, the post had gathered about $9.5 million in bets. This exercise costs less than a dollar and has attracted millions. This particular platform was created to help people place their bets on current events causing the biggest ripples in pop culture, politics, business, health, and so much more. Since the platform is non-custodial, it doesn’t hold or store the bets placed, eliminating the middleman’s cut from the winners.
Crypto derivatives exchange behemoth FTX has also seen a lot of activity since the votes started being counted. For instance, pro-Trump derivatives spiked from $0.38 to $0.80 in the initial stages of the count before crashing as Biden’s numbers picked. The tokens which were supposed to be redeemed at $1 each should he secure re-election are currently trading at lower than $0.09 on FTX, signaling low confidence. Although there was a lot of fluctuation throughout the day, about $16 million in TRUMP tokens were traded. Joe Biden’s garnered about $6 million, which is also quite impressive.
On Nov 4th, Ethereum based Augur posted an impressive $8.6 million in election-related volume and more than $4.7 million in open interests. Since the company launched five years ago, it had struggled to get a footing in the market until the U.S midterm elections were in full swing. This is a big signal that these events are highly lucrative and attract a lot of interest. According to Shayne Coplan, founder of Polymarket, the elections have spiked so much interest. So much that even people who aren’t native crypto users have wanted a piece of the action.
The attention garnered by these crypto prediction markets during this election is going to fuel innovation for months to come. Polymarket recently announced securing $4 million in funding to help it grow into the next phase of development, seeing that competitors such as Augur launched a Version 2 earlier this year. Also seeking to capitalize on the elections is anonymous cryptocurrency betting company YieldWars. It launched its election battle on Election Day’s eve and has so far garnered more than $50,000 in bet money. On the platform, users can bet using $ETH or the native $WAR token.
To keep the momentum going even after the election, YieldWars has confirmed that it has found a balance to keep visitors coming. The style setting is ideal for battle royale events such as sporting events, which should be a big attraction for fans all over the world. Prediction markets are a brilliant execution of decentralized finance and blockchain technology as a whole. Not only is the entire process decentralized, but it also means that reliable, immutable sources can be used, thereby making everything simple and transparent for everyone. Although centralized betting platforms are still taking the lead, it’s a good sign of things to come. Companies such as PredictIt have seen a lot of activity around the 2020 presidential race in the United States. As of Monday, the site has more than 117 million shares that have been traded.
Although not here it should be, decentralized betting is taking root. Given the flurry of activity around this election, it’s clear that there is a demand for this sort of product. It’s now up to innovators to continue creating innovative products that will push people to DeFi.