Are you good at making predictions? If so, Polymarket lets you predict the outcomes of real-world events and earn money if you are correct. If you wish to understand how this decentralized prediction market works, then we recommend reading our guide.
Polymarket Defined
Polymarket is a leading prediction market that gives users the opportunity to speculate on the outcomes of various events by purchasing shares. Running on the Polygon blockchain, Polymarket allows bettors to participate in a wide range of events, including political, crypto, football events, and many more.
As a decentralized prediction market, Polymarket does not set the odds. Instead, shares of each event are determined purely by the supply and demand forces.
How Polymarket Work
Polymarket is basically a marketplace that facilitates the trading of shares of various events. Here is how it functions:
1. Users Drive the Odds: As mentioned, Polymarket has no power to set the odds. The odds of every event on the platform are driven by users. Also, They are represented as shares, whose prices range between $0 -$1. For instance, if the “Yes” shares of the “Will Bitcoin Hit $100K Before 2025” event are priced at $0.8, then it means Bitcoin has an 80% chance of reaching $100,000 before the start of 2025.
2. Different Events Are Listed: Users can create markets for various events, from sports to crypto.
3. Markey Resolution: Once an event has concluded, Polymarket relies on decentralized oracles to resolve that market. Users who predicted correctly receive $1 per share, while those with wrong predictions lose their capital.
4. USDC Deposited Are Accepted: As of November 2024, you can only buy shares on Polymarket using Polygon-based USDC. This stablecoin allows users to save on transaction costs.
Setting Up a Polymarket Account
The process of registering a Polymarket account is simple. First, go to Polymarket.com and click sign up. Next, enter your email and password. Note that you will not be able to create an account if you are from the United States due to regulatory issues.
After confirming your email, you will be ready to start betting on various events. But you will need money to do this. So, how do you deposit USDC into your Polymarket account? Click “Deposit USDC” and copy the provided address.
After that, paste the address on the source holding your Polygon-compatible USDC. Now specify the amount of USDC you want to send to your Polymarket account and press “Withdraw” after selecting Polygon as the withdrawal network.
Once the USDC tokens arrive in your Polymarket, you can begin to place bets in your favorite markets.
How Does Polymarket Make Money?
Here is how Polymarket generates revenue:
Transaction fees: Polymarket deducts a small percentage from all winning trades. Most of the collected money is distributed among liquidity providers, while some cover operational costs.
Pros and Cons of Polymarket
Pros
1. Polymarket is Transparent: Since the platform is decentralized, anyone can see what’s happening.
2. Low Fees: The fees charged on winning trades are considerably small. Furthermore, users do not incur massive network charges, considering Polygon facilitates low-fee transactions.
3. Diverse Markets: As stated, Polymarket allows users to create markets for any type of event, thus offering a wide range of options.
4. No Influence From Centralized Entities: Odds on Polymarket are determined by demand and supply, meaning no centralized entity has control over share prices.
Cons
1. US Users Are Restricted: Americans can only view the listed markets without making predictions, as Polymarket was ordered to block US users in 2022 by US regulators.
2. Crypto-Only: Since Polymarket only supports USDC, people not familiar with cryptocurrencies may find it challenging to use the platform.
3. Limited Liquidity in Some Markets: Most events, especially the popular ones, enjoy deep liquidity. However, less popular markets usually have low liquidity, making it difficult for users to sell their shares.
4. Whale May Manipulate Markets: If a whale places a large bet, they are likely to cause the share prices of a particular market to skyrocket significantly.
