Polymarket: The Cryptocurrency Prediction Platform
Polymarket emerges as a crypto prediction market platform that offers users the opportunity to wager on diverse global events in areas like sports, politics, and the dynamic world of cryptocurrencies.
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Operating on the Polygon blockchain, Polymarket offers the advantage of lower transaction fees. Its core lies in futures contracts, with prices determined by the prevailing market demand and supply. Polymarket incorporates a commission rate of 2-5% within these futures.
Polymarket: The Genesis and Funding
Initiated in 2020, Polymarket has been driven by the vision of Shane Coplan, serving as the lead developer and CEO, and Liam Kovach, who heads the engineering department.
This venture succeeded in securing $4 million in an investment round on October 19, 2020. The project received backing from 17 investors, including notable names like Polychain, New Form Capital, ParaFi Capital, and Electric Feel Ventures. The question of whether Polymarket will introduce its native token remains unanswered.
Platform's Operating Mechanics
Each event listed on Polymarket offers two betting choices: users can purchase either a “Yes” or “No” lot. If the user's bet aligns with the outcome (i.e., proves accurate), the reward stands at $99 for every complete lot acquired. In the case of an incorrect prediction, the user forfeits the full amount invested in the futures contract.
Take, for example, a bet on whether a nuclear bomb will be detonated before December 31, 2023. The “Yes” lot is priced at $5.4, and the “No” lot at $97.1. The combined value of both bets totals $102.5. Given that a successful bet on Polymarket yields $99, the platform makes a $3.5 profit for every $100 invested by traders in such an event, which translates to a 3.5% gain.
Bet on the detonation of a nuclear weapon before 31.12.23. Source: polymarket.com
The prices of these lots are subject to change based on global events, economic trends, the trading decisions of the traders themselves, and their volume.
Betting Avenues on Polymarket
Polymarket opens up betting on a variety of event categories such as:
- Politics;
- Science;
- Pop Culture;
- Sports and Competitions;
- Cryptocurrencies;
- Business.
New betting options also emerge in line with market dynamics. For instance, bets were available on whether Changpeng Zhao, the CEO of Binance, would retain his position until the end of 2023, prior to his eventual departure.
Bets can also be placed on the future prices of various assets, the start of airdrops from certain projects, and potential scams in exchanges, etc.
Cryptocurrency market-related bets on Polymarket. Source: polymarket.com
Getting Started on Polymarket
To kickstart your experience on Polymarket, follow these straightforward steps:
- Deposit the desired amount into a Metamask wallet on the Polygon network. Most transactions can be made using USDT, USDC, and MATIC cryptocurrencies, but it's important to note that the USDC stablecoin is the most liquid;
- Connect your wallet to the site;
- Make a deposit to the address generated by Polymarket for your account, or directly fund it with USDC from your own wallet;
- Select an event and purchase the desired number of lots.
Should your bet win, the funds are automatically credited to your Polymarket account balance. On the other hand, a lost bet results in a 100% forfeiture of the amount invested in the futures.
Polymarket Use Cases
Besides its entertainment value, Polymarket in the world of cryptocurrency offers more than just a lottery-like experience:
- Users can hedge their stakes by purchasing bets on the opposite outcome of an event. For example, if a user holds $300 in HTX on an exchange but is uncertain of its stability, they could buy several lots (currently priced at $3 each) betting on the HTX platform going bankrupt in 2023. This way, if HTX does fail, the user loses their exchange assets but gains from the lots purchased;
- Opportunities for arbitrage may also arise between Polymarket and derivative platforms, especially futures and options exchanges. This scenario, known in betting jargon as a “bookmaker’s fork,” occurs when the profit from two contrasting bets is greater than the total amount invested.
The higher the liquidity and the number of bets on an event, the more favorable the lot price becomes.
Conclusion
Polymarket stands out as an intriguing betting platform, offering not just entertainment but also avenues for profit-making and risk-hedging. However, it's crucial to approach it with caution, be mindful of the general perils associated with DeFi platforms, and invest only what you can afford to lose.
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