Web3 forecasting platform Polymarket is experiencing unprecedented growth, largely fueled by the upcoming 2024 US presidential election.
The platform has already achieved its highest trading volumes and user participation yet this month, cementing its status as a major player in the prediction market.
Record consecutive growth
Polymarket’s trading volume reached $390.6 million in August, marking the platform’s fourth consecutive record month, based on data from Dune Analytics.
The number of active users on the platform also reached a new milestone: 53,981 traders were active this month. Additionally, open interest on the platform peaked at $103.3 million on August 22, demonstrating the increased interest in prediction markets.
A significant portion of this activity is driven by election-related markets, which accounted for 87.6% of Polymarket’s trading volume last week. By mid-July, these markets were even more dominant, accounting for 93.2% of the platform’s weekly volume.
While the presidential election is the main driver, Polymarket’s non-electoral markets are also showing growth. Last week, 19,135 users traded on non-election markets, a significant increase from the 424 users recorded in early May.
These markets reached a weekly volume peak of $28.3 million in late July, although this has since fallen to $17.8 million.
Praise and criticism
The surge in activity on Polymarket has led to discussions about the role of prediction markets in public discourse. Some praise the platform for its potential to serve as a social tool, while others argue that it comes too close to gambling for comfort.
Ethereum co-founder Vitalik Buterin praised prediction markets like Polymarket for their potential as “social epistemic tools.” He argued that these platforms offer the public a unique way to participate in collective predictions about important events.
According to Buterin, prediction markets provide insights that are less susceptible to the editorial biases common in traditional media and social media platforms. He also highlighted the potential use of these markets in governance, suggesting that they could contribute to more informed decision-making processes.
However, critics were skeptical of Buterin’s optimistic view. They argued that Polymarket’s election-related markets are more like traditional gambling than unbiased forecasting tools.
The concern is that market movements on Polymarket closely mirror those on mainstream betting platforms, suggesting that some participants are using the prediction markets primarily for arbitrage opportunities between the two media.
This raises questions about whether the outcomes and opportunities generated by these markets are truly independent, or whether they are influenced by similar biases that Buterin sought to avoid. Critics suggest that while prediction markets offer a new approach to forecasting, they can still be subject to the same limitations as traditional betting markets.