Source: Web3 Sniffing Observation
As the US presidential election gains widespread attention, the cryptocurrency prediction market is also heating up. The prediction market Polymarket, which has been previously followed and retweeted by Trump, has aroused curiosity about its background and gameplay. Let's explore it.
On June 28th, the first presidential debate between Biden and Trump sparked global attention, and the participation in the election prediction on the world's largest prediction platform, Polymarket, also surged. Current data shows that the probability of Trump winning the election is 62%, while Biden's chances of winning are 23%.
Different from common cryptocurrency projects, Polymarket is a relatively unique cryptocurrency project that focuses on prediction markets. It offers binary option products, allowing users to place bets on specific events (such as the US presidential candidate election or the target price of cryptocurrencies). In simple terms, users can bet "YES" or "NO" on the outcome of an event, and this option becomes a derivative product they obtain.
Furthermore, it is easy to notice that the most popular prediction category on Polymarket is actually US politics. The top five prediction markets are all related to the US political arena. This reflects the unique appeal of the platform in predicting and investing in political events.
What is Polymarket?
Polymarket is a decentralized prediction market platform based on blockchain, allowing users to bet on the future outcomes of various topics using cryptocurrencies. The platform operates on the Polygon blockchain using smart contracts, which reduces costs and speeds up transaction settlement.
On Polymarket, users do not directly store funds but participate in the market by providing liquidity through Automated Market Makers (AMM) or order book systems. This model allows users to bet on the outcomes of events ("YES" or "NO") and win corresponding bets when their predictions are correct.
Last month, Polymarket founder Shayne Coplan announced the completion of a $45 million Series B financing, led by Peter Thiel's Founders Fund and with participation from Vitalik Buterin, co-founder of Ethereum. So far, Polymarket has raised a total of $74 million in financing.
Polymarket allows users to trade and exchange shares of real-money markets on currently debated events by depositing USDC stablecoins into the Polymarket wallet and purchasing result shares to participate in the market. The prices of these shares reflect the market's expected probability of event outcomes.
As Polymarket is based on the Polygon network, it has lower transaction fees and faster transaction speeds, enabling users to predict and bet with lower costs and higher efficiency.
Additionally, Polymarket supports multiple deposit methods, making it convenient for different types of users to handle funds.
For Web3 users: They can directly deposit USDC, USDT, or ETH on the Polygon chain from their wallets or exchanges (if ETH is deposited, it will be automatically converted to USDC). Almost all major exchanges support the Polygon chain, making the operation very convenient.
For Web2 users: They can deposit funds through mainstream payment and trading platforms such as credit cards, Apple Pay, Google Pay, Paypal, and Robinhood. This provides convenience for users accustomed to traditional payment methods.
How Polymarket Works
The main prediction category in Polymarket is binary prediction markets, where users can predict whether an event will or will not occur. This straightforward mechanism is easy for users to understand and participate in. For example, users can bet on who will win the 2024 presidential election on Polymarket. Users express their predictions by purchasing "YES" or "NO" shares on Polymarket.
When the election results are announced, if a user's prediction is correct, they will earn profits; if the prediction is wrong, they will lose the amount bet. This mechanism incentivizes users to make accurate predictions. The prices (odds) represent the current probability of events occurring.
Example: In the market for "Will Trump win the 2024 presidential election," if the trading price for "YES" is 63 cents, it means the market believes there is a 63% chance of Trump winning.
If a user believes the actual probability of Trump winning the presidential election is greater than 63%, they will purchase "YES" shares at a price of 63 cents per share. If their prediction is correct, meaning Trump ultimately wins the election, each "YES" share will be worth $1, resulting in a profit of 37 cents per share. Conversely, any user holding "NO" shares will find their shares worthless.
Example of predicting the US election: In the market trading page, you can see the buy and sell modes on the right. Taking the buy option as an example, you can bet YES/NO. Trading is divided into market trading, limit trading, and AMM. After selecting the trading mode, simply enter the amount and click to trade.
In addition to participating in predictions in the market, users can place limit orders to earn rewards, which is participating in Polymarket's liquidity reward program. It can be said that Polymarket provides users with a direct and clearly incentivized prediction platform, enabling them to effectively predict and invest in various events.
Interactive Experience Tutorial
Polymarket has completed a $74 million financing, and the project has not yet issued tokens. Due to its leading position in the prediction market, many people are optimistic about this project. If there is an airdrop in the future, it is likely to be a major project. For those who are optimistic, it is advisable to prepare for interaction in advance.
- Registration: First, you need to register with Polymarket. Go to the official website, click the register button in the upper right corner, and choose between email registration and wallet link registration. Since Polymarket uses passwordless email login, it is recommended to register with an email and then use wallet linking for authorization and authentication to log in directly.
- Deposit: There are several methods to deposit funds into your account. Here, we will use wallet deposit as an example and click "skip."
Polymarket will directly generate a wallet address, and you need to deposit from an exchange or another platform. The currency for deposit is USDC. After the on-chain deposit, you also need to click "Confirm pending deposit" to confirm the arrival and activation of the currency. Once these steps are completed, you can start trading.
Go to the "Portfolio" option, copy the deposit address, and deposit an appropriate amount of USDC directly from your wallet (20-30 USDC for the first attempt is recommended). The deposit is usually credited immediately.
- Trading: After completing the deposit, go to the "Markets" section to start betting. You can see the description of each packaged product, then choose "YES" or "No" to place your bet on the event.
After placing the bet, there are two ways to withdraw the bet. The first method is to choose the "Portfolio" option to view your betting situation. Click to enter. If we bet on "NO" for this event, we choose the "NO" option to sell by clicking "sell" and entering the maximum MAX quantity you purchased to complete the withdrawal.
The second method is to wait for the prediction event to end and redeem your options. It should be noted that if the prediction of the event is correct, you will earn profits (each share held can earn $1). If the prediction is incorrect, you will lose the principal and profits.
- Liquidity Rewards:
Polymarket's trading mechanism uses an order book format, which requires more market depth orders to promote trading liquidity. To encourage user participation, the platform has introduced liquidity reward activities. Users can earn subsidies by trading with limit orders, and the closer the order is to the buy and sell prices, the more profits can be earned.
The operation process is simple. Switch the trading mode to limit trading (Limit), then move the mouse to the "Rewards" in the upper right corner of the order book. The system will automatically display the required range of orders for rewards. All order prices within the light blue box can enjoy the reward policy. Additionally, providing liquidity may involve uncompensated losses, so it is recommended to start with an investment of 5 to 10 USDC for the first attempt.
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