Markets
Predicting the Next President and Making Money with Decentralized Markets
What are they saying about decentralized prediction markets for the 2024 election? Find out how you can predict the next president and profit from your insights.
Have you ever wondered if you could predict the outcome of an event and profit from your foresight? Decentralized prediction markets are making this possibility a reality. These markets have seen explosive growth recently, especially as the 2024 US presidential election approaches.
Polymarket, a leading cryptocurrency prediction platform, has seen a dramatic surge in activity. According to Dune AnalysisPolymarket’s volume surpassed $100 million in June alone, marking a record-breaking month in the platform’s successful year.
The surge continued into July, with $9.3 million worth of bets placed on the first day alone. This daily volume surpassed the typical monthly volumes seen on Polymarket last year, which ranged between $3 million and $8 million.
From January to May 2024, monthly volumes on Polymarket fluctuated between $40 million and $60 million, marking a gigantic increase of 7 to 12 times compared to the monthly volumes of the previous year. In June, $111 million in bets were placed, the highest ever for the platform.
Polymarket Monthly Volume | Source: Dune Analytics
One of the most popular contests on Polymarket is the “Winner of the 2024 presidential election,” which has attracted more than $208 million in bets since its inception. The odds currently favor Donald Trump at 66% and Joe Biden at 21%.
Analysts at the research and brokerage firm Bernstein Note that blockchain-based platforms like Polymarket are amplifying the efficiency of election markets by providing transparency and liquidity. They mentioned this in a recent note to clients, noting how Polymarket, which is based on blockchain technology, is increasing public appreciation for the role of cryptocurrencies in politics.
With growing interest in these platforms, we delve deeper into how they work, explore the most important bets, identify the leading platforms, and find out how you can participate and potentially profit without placing bets.
What are decentralized prediction markets and how do they work?
Decentralized prediction markets are betting platforms that allow people to bet on the outcomes of real-world events using blockchain technology.
These markets operate on decentralized networks, meaning there is no central authority controlling transactions. Instead, they use smart contracts—self-executing contracts with the terms of the agreement written directly into the code. This ensures that all transactions are transparent, secure, and tamper-proof.
One of the most popular decentralized prediction markets is Polymarket. Polymarket runs on Ethereum (ETH) Level 2 (L2) network, Polygon (MATIC), and allows users to speculate on various events, such as political outcomes, entertainment and sports, using the stablecoin USDCThis integration ensures liquidity and stability in transactions.
Polymarket uses an automated market maker (AMM) Uniswap-like pool model (UNI). Liquidity providers provide on-chain market liquidity and users trade these tokenized shares to place their bets.
For example, if you believe a specific candidate will win an election, you can buy “Yes” stock at a price that reflects the current market odds. If the event happens as expected, you make money. If it doesn’t, you suffer losses. This system allows you to profit from your knowledge and predictions about various events.
Polymarket is not the only player in the decentralized prediction market. Platforms like Augur and Hedgehog also offer similar services, allowing users to speculate on a variety of events.
Augur, for example, operates on the Ethereum blockchain and uses a native token (REP) for betting. Hedgehog is another emerging platform, which uses the same principles of decentralized betting with a focus on user-friendly interfaces and diversified market offerings.
Popular bets on polymarket
The buzz surrounding the 2024 US presidential election has generated a flurry of activity on Polymarket. We look at some of the most popular bets out there and what they reveal about public sentiment.
Biden’s mediocre performance in the debate
The first presidential debate on June 27, 2024 marked a critical shift in betting patterns on Polymarket. Joe Biden’s performance, widely criticized as one of the weakest since the era of televised debates began, triggered a surge in betting.
Before the debate, Biden had a 91% chance of being the Democratic nominee. However, after his performance, this fallen at 71%, with over $21.2 million bet on Biden and $5.06 million on Kamala Harris, who has so far obtained 11% of the vote.
At the same time, the likelihood that Biden would drop out of the race increased significantly from 19% before the debate to 44% by July 1. While that’s slightly improved At 35%, the volatility reflects the uncertainty surrounding his campaign.
On the Republican side, betting sentiment is overwhelming favor Trump. With more than $6.6 million in bets, Trump is projected to have a 99% chance of becoming the Republican nominee, a stark contrast to the fluctuating confidence in Biden’s campaign.
Swing States Forecast
Swing states are crucial in determining the outcome of the election and Polymarket’s predictive polls point to a Republican victory in key states.
For example, the Republicans are expected to win Nevada (71%), Michigan (53%), Pennsylvania (58%), Arizona (73%), Wisconsin (56%), Georgia (80%) and North Carolina (83%).
With over $3 million in total bets supporting these predictions, the Republican Party emerged as the clear winner in all of these swing states.
There is also a noteworthy prediction regarding international affairs: there is a 56% chance that Israel will invade Lebanon before September, adding fuel to the fire of the already complex geopolitical situation around the world.
How to make money with decentralized betting markets?
Decentralized prediction markets offer opportunities to make money, but they also come with very high risks. Here’s how you can profit from these platforms, along with some important tips.
Becoming a Liquidity Provider
One of the easiest ways to make money on platforms like Polymarket is to become a liquidity provider. Here’s how it works:
- Deposit USDC: You can deposit USDC into the platform’s liquidity pool.
- Earn commissions: By providing liquidity, you earn a share of the trading fees every time users place bets.
- Automated Market Maker (AMM):The platform uses an AMM model, ensuring that your funds are used to facilitate trading and betting efficiently.
This method ensures a steady stream of income without having to bet directly on events, making it a less risky option than direct betting.
Making direct bets
Another way to make money is to place direct bets based on the odds of specific events. For example:
- Choose an event: Select an event you want to bet on, such as the outcome of the presidential election.
- Analyze the probabilities: Consider the current odds and make your prediction.
- Place your bet: Bet an amount you are comfortable with, knowing that if your prediction is correct, you can get a significant return.
In addition to Polymarket, several other platforms offer decentralized prediction markets. These platforms work in a similar way, allowing you to provide liquidity or place direct bets on various events.
While these opportunities can be lucrative, they come with very high risks. If the odds are not in your favor, you could suffer substantial losses.
It is essential to trade with caution and never invest more than you can afford to lose. Always do thorough research and consider seeking advice from financial experts before taking the plunge.
Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.