Source: Web3 Sniffer Observation

With the widespread attention to the US presidential election, the encryption prediction market has also become popular. Polymarket, a prediction market that has been followed and retweeted by Trump, makes people curious about the background and gameplay of the platform. Let's explore it.

On June 28th, the first presidential election TV debate between Biden and Trump attracted global attention, and the participation in the election prediction on Polymarket, the world's largest prediction platform, also increased accordingly. Current data shows that Trump's probability of winning the election is 62%, while Biden's probability of winning is 23%.

Unlike common cryptocurrency projects, Polymarket is a rather special crypto project that focuses on the prediction market. It provides binary options products, allowing users to bet on specific events such as the US presidential candidate election or the target price of cryptocurrencies. In simple terms, users can place bets on the outcome of an event with a 'YES' or 'NO' option, which is essentially an options product you acquire.

In addition, it is not difficult to find that the hottest prediction category on Polymarket is actually American politics. The top five prediction markets are all related to the American political arena. This also reflects the unique appeal of the platform in predicting and investing in political events.

What is Polymarket?

Polymarket is a decentralized prediction market platform based on blockchain, allowing users to bet on the future outcomes of various topics using cryptocurrency. The platform operates on the Polygon blockchain using smart contracts, reducing costs and speeding up transaction settlement speed.

On Polymarket, users do not store funds directly, but participate in the market by providing liquidity through Automated Market Makers (AMMs) or order book systems. This model allows users to bet on the outcome of events ('yes' or 'no') and win corresponding bets when their predictions are correct.

Last month, Polymarket founder Shayne Coplan announced the completion of a $45 million Series B funding round led by Founders Fund, founded by Peter Thiel, with participation from Ethereum co-founder Vitalik Buterin. So far, Polymarket has raised a total of $74 million.

Polymarket allows users to trade and redeem outcome shares by investing in real-money markets on current hot topics. Users need to deposit USDC stablecoins into the Polymarket wallet and purchase outcome shares to participate in the market. The price of these shares reflects the market's expected probability of the event outcome.

Because Polymarket is based on the Polygon network, its transaction fees are lower, and the transaction speed is also very fast. This allows users to make predictions and bets with lower costs and higher efficiency.

In addition, Polymarket supports multiple deposit methods, making it convenient for users of different types to handle funds.

For Web3 users: you can directly deposit USDC, USDT, or ETH on-chain from your wallet or exchange (if you deposit ETH, it will be automatically converted to USDC). Almost all mainstream exchanges support the Polygon chain, making the operation very convenient.

For Web2 users: You can deposit funds through mainstream payment and trading platforms such as credit cards, Apple Pay, Google Pay, Paypal, Robinhood, etc. This provides convenience for users accustomed to traditional payment methods.

How Polymarket Works

The primary prediction category in Polymarket is binary prediction market, where users can predict whether an event will or will not occur. This simple and clear mechanism is easy for users to understand and participate in. For example, users can bet on who will win the 2024 presidential election on Polymarket. Users express their predictions by purchasing shares of "yes" or "no".

When the election results are announced, if the user's prediction is correct, they will receive profits; if the prediction is incorrect, they will lose the amount of the bet. This mechanism incentivizes users to make accurate predictions about the outcome. In this mechanism, the price (odds) represents the probability of the current event happening.

Example: For instance, in the market of "whether Trump will win the 2024 presidential election", if the trading price for "yes" is 63 cents, it means the market believes the possibility of Trump winning is 63%.

If users believe that the probability of Trump winning the presidential election is greater than 63%, they will buy the 'Yes' share at a price of 63 cents per share. If their prediction is correct, i.e. if Trump eventually wins the presidency, then each 'Yes' share will be worth $1, with a profit of 37 cents per share. On the contrary, any user holding 'No' shares will find that their shares are worthless.

Operation example of U.S. election prediction: as shown in the figure below, after entering the market trading page, you can see the buy and sell modes on the right. Taking the buy option as an example, you can bet on YES/NO. Trading is divided into Market Order, Limit Order, and AMM. After selecting the trading mode, simply enter the amount and click on the transaction.

In addition to participating in predictions in the market, users can also place limit orders to earn rewards, which is participating in Polymarket's Liquidity Rewards Program. It can be said that Polymarket provides users with a direct and clearly incentivized prediction platform, enabling them to effectively predict and invest in various events.

Interactive Experience Tutorial

Polymarket has raised $74 million in funding and has not yet issued tokens. Due to its leading position in the prediction market, many people are optimistic about this project. If there is an airdrop in the future, it is likely to be a significant project. For those who are optimistic, it is recommended to plan ahead and get involved.

1. Register. First, you need to register for Polymarket. Go to the official website and click on the register button in the top right corner. There are two ways to register: email registration and wallet link registration. Since Polymarket uses passwordless email login, it is recommended to register with your email and then use the wallet to link and authorize for authentication, and login directly.

2. Deposit. There are several methods to deposit funds into your account. Here we take wallet deposit as an example, click "skip".

Polymarket will directly generate a Wallet Address, which needs to be deposited from an exchange or other platform. The deposited currency is USDC. After the on-chain deposit is credited, you also need to click 'Confirm pending deposit' to confirm the currency's arrival and activation. Once these steps are completed, you can start trading.

Enter the "Portfolio" option, copy the deposit address, and use the wallet to directly deposit the appropriate amount (20-30U for the first try) of USDC, which generally arrives immediately.

3. Trading. After the deposit is completed, enter the 'Markets' option to start betting. You can see the description of each packaged product, and then bet on the event by choosing 'YES' or 'No' to complete the bet.

After completing the bet, there are two ways to exit the bet: the first one is to select the 'Portfolio' option to view your betting status, click on it, if we bet on the 'NO' of this event, then we choose the 'NO' options to sell, enter the maximum MAX quantity you purchased, and complete the exit.

The second way is to wait for the prediction event to end and exchange your own Options. It should be pointed out here that if the prediction of the event is correct, you will receive a profit (1 USD per share held). If the prediction of the event is wrong, you will lose the principal and the profit.

3, Liquidity rewards.

Polymarket's trading mechanism adopts the order book form, which requires more order book entries to promote trading liquidity. In order to encourage user participation, the official has launched a liquidity reward activity. Users can earn subsidies by trading through limit orders, and the closer the order is to the buy and sell prices of the order book, the more profits they can earn.

The operation process is also simple. Switch the trading mode to Limit Order (Limit), and then move the mouse to the "Rewards" in the upper right corner of the order book. The system will automatically display the required maker range, and all maker prices in the light blue box can enjoy the reward policy. In addition, providing liquidity may result in unpaid losses. It is recommended to invest 5 to 10U for the first attempt.