Polymarket is a decentralized prediction market platform built on the Polygon blockchain. It allows users to bet on the outcomes of real-world events, ensuring transparency and security of transactions through smart contracts.
History of Polymarket
Polymarket was founded by Shayne Coplan in 2020 and operates on the Ethereum blockchain. The platform gained attention during the 2020 U.S. Presidential Election, leading to a sharp increase in users and trading volume. In 2021, Polymarket came under scrutiny from the Commodity Futures Trading Commission (CFTC) for allegedly offering unlicensed binary options. This matter was resolved in early 2022 with a settlement involving a $1.4 million fine and the closure of non-compliant markets. Since then, the platform has restricted U.S. users from trading. Despite regulatory challenges, in 2024, Polymarket secured $45 million in a Series B funding round led by Peter Thiel’s Founders Fund, with high-profile investors like Ethereum co-founder Vitalik Buterin joining. The platform also brought on seasoned executive Richard Jaycobs to explore opportunities for U.S.-regulated activities and statistician Nate Silver as an advisor.
How Polymarket Works
Polymarket allows users to bet on various topics by connecting their non-custodial Web3 wallets. The platform operates without KYC procedures, prioritizing user privacy and accessibility. Polymarket leverages blockchain technology to create a transparent and secure environment for betting on events ranging from politics to entertainment and economic trends. The platform primarily operates on Polygon, a Layer-2 solution, allowing it to handle large transaction volumes efficiently. ### Smart Contracts Polymarket relies on smart contracts to automate and manage transactions. These contracts ensure transparency and immutability of every trade and market resolution. ### Security Measures Polymarket users maintain control of their funds through self-custodial wallets, meaning they hold their private keys. This guarantees that Polymarket never has direct access to user funds. The platform also employs encryption and authentication methods to safeguard user data and transactions. ### Polymarket Fees Polymarket charges minimal fees primarily to cover transaction costs and provide incentives to liquidity providers. Fees are paid in USDC and help maintain market liquidity.
Polymarket Competitors
Polymarket faces competition from several other prediction market platforms. Augur is one of the earliest decentralized prediction markets, also built on Ethereum. Gnosis, another Ethereum-based platform, provides the infrastructure for creating prediction markets and offers a range of tools and applications to support its ecosystem. PredictIt represents a more traditional, centralized prediction market platform focusing on political events and operates under a no-action letter from the CFTC.
Polymarket continues to expand its influence through innovative use of blockchain technology and its unique approach to prediction markets. Despite a competitive landscape, the platform shows steady growth and attracts new users.
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