Author: Seedco

According to Business Insider, the online prediction market platform Polymarket is undergoing a new round of financing, with investors valuing it at up to $10 billion.

This figure represents an almost tenfold leap from the $1 billion valuation three months ago, a remarkable speed.

Founded in 2020, this crypto startup has not only attracted a triple backing from Silicon Valley capital, political forces, and crypto funds, but has also shown an astonishing growth curve in trading volume: just before the 2024 U.S. presidential election, Polymarket's monthly trading volume reached a historic high of $2.5 billion in October 2024. Although it has since declined from its peak, the platform still maintains a monthly trading volume of about $1 billion, surpassing its total for all of 2023.

Financing Background and Supporters: Capital + Politics

Polymarket was founded in 2020 by Shayne Coplan. Coplan attended New York University (NYU) for computer science but dropped out before graduating to focus on cryptocurrency and the technologies and ideas related to prediction markets.

The financing background of Polymarket is quite luxurious:

• Silicon Valley Capital: Three months ago, Peter Thiel's Founders Fund led Polymarket's previous round of financing, valuing Polymarket at about $1 billion. This round of financing provided Polymarket with a relatively solid early support and capital foundation. Thiel is known for investing in Facebook, SpaceX, and Palantir, and this bet indicates that prediction markets have entered the mainstream venture capital landscape.

• Political "Connection": In the latest round of financing, Donald Trump Jr.'s 1789 Capital invested tens of millions of dollars, though the specific amount has not been disclosed, and Donald Trump Jr. himself has joined the advisory team.

  

  1789 Capital is a relatively new VC/venture capital institution, founded in 2022 by Omeed Malik, Chris Buskirk, Rebekah Mercer, and others. The fund emphasizes "patriotic capitalism" and investments guided by American values. Its portfolio includes companies in defense technology, AI, biotechnology, media, and more, in addition to Polymarket.

• Crypto Capital: In early financing, several Web3 funds (Polychain Capital, ParaFi Capital, Coinbase Ventures) supported Polymarket, valuing the natural fit between prediction markets and crypto payments, as well as smart contracts.

This combination of "Silicon Valley + Politics + Crypto" has created a unique moat for Polymarket: it can withstand regulatory challenges and attract traffic through public opinion effects.

Previously, in 2021, the U.S. Commodity Futures Trading Commission (CFTC ) had prohibited Polymarket from offering prediction contracts in the U.S. However, in 2024, the U.S. regulatory attitude shifted, allowing it to operate compliantly within the country. This "green light" not only enhanced its legitimacy but also became a significant reason for capital to dare to invest heavily.

Competition and Traffic: Surpassing Gambling Giants

The rise of Polymarket is not an isolated phenomenon. The prediction market as a whole is undergoing a round of capital reassessment, with its main competitor Kalshi seeing its valuation double from $2 billion to $5 billion this year, indicating a collective bet from capital on this sector.

Compared to traditional gambling platforms, Polymarket's growth is more explosive. Giants like FanDuel and DraftKings rely on cyclical events like the NFL and NBA to drive traffic, while Polymarket's contracts cover a broader range: from U.S. elections and Supreme Court rulings to Federal Reserve interest rate decisions, geopolitical conflicts, and even entertainment gossip. This breadth allows it to maintain sustained popularity throughout the year.

More importantly, prediction markets are closely tied to news cycles. For example, during the 2024 U.S. presidential candidate debates, Polymarket's related markets saw daily trading volumes exceed $100 million; similarly, contracts related to the Ukraine conflict or Federal Reserve meetings quickly became focal points for capital. This characteristic of "events as markets" is an advantage that traditional gambling platforms find hard to replicate.

As a result, Polymarket not only scales up to rival or even surpass established gambling giants but also demonstrates unique competitiveness in coverage, user stickiness, and social influence, transitioning from a niche crypto experiment to a mainstream "information entertainment speculation platform."

Why Are Prediction Markets So Popular?

Information Efficiency: Price as Consensus

Prediction markets convert dispersed opinions into real-time price signals through betting. Compared to the lag and bias of polls, prediction market prices resemble real-time "collective wisdom." Whether it's a presidential election or an international conflict, these can quickly translate into market contracts. The hotter the event, the higher the trading volume, creating a self-reinforcing cycle.

Dual Drivers of Speculation and Entertainment

Users can express opinions while also seeking profits. Major events inherently carry topics of interest, making prediction markets both speculative and entertaining.

Institutional Endorsement

• Coinbase views prediction markets as the next significant use case for crypto in "Prediction markets are having a moment," due to their reliance on stablecoins and on-chain settlement, which have low friction costs and strong scalability.

• a16z Crypto points out in "Prediction markets and beyond" that the potential of prediction markets extends beyond politics and finance to AI, decentralized science (DeSci), and governance mechanisms.

• a16z's "State of Crypto" report directly names prediction markets as one of the emerging sectors for future growth.

When leading institutions in the industry are betting on this direction, capital naturally follows suit.

Future "Information Exchange"? Risks and Controversies

Despite the soaring valuations and trading volumes, prediction markets still come with significant risks. The most frequently mentioned issue is manipulation: while market prices theoretically represent collective wisdom, in reality, large players can create false probability signals through concentrated betting in a short time, misleading public expectations.

Another long-standing challenge is the arbitration and adjudication mechanism. Prediction market contracts often require clear definitions of future events, but many real-world events are filled with ambiguity, making the final determination process prone to controversy. If arbitration lacks transparency or credibility, user trust will erode, and the market mechanism may fail.

Additionally, policy and ethical concerns have never ceased in Washington and academia. Critics argue that prediction markets could amplify polarized sentiments on sensitive topics like elections and geopolitics, even providing a platform for misinformation; supporters emphasize their transparent value as a "social expectation thermometer." This controversy ensures that its future development path will not be entirely smooth.

From early monthly trading volumes of less than $100 million to a peak of $2.5 billion in October 2024, Polymarket has rapidly crossed doubts and moved toward the mainstream. It is more sensitive and real-time than traditional polls, yet it also comes with controversies. Regardless of support or opposition, the market can no longer ignore its existence. Future public expectations are quietly crystallizing in the price curve that fluctuates with events, rather than relying solely on expert interpretations.

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