After the election battle, Polymarket has been hailed as a "truth machine." However, the more popular it becomes, the more calmly we need to view it, as there are still various controversies surrounding the platform, including the "political leanings" of its founders and investors.

Written by: Yangz, Techub News

Polymarket is undoubtedly the most talked-about Web3 application behind this U.S. election. While major media outlets like The Wall Street Journal are still predicting the voting results in key swing states, this decentralized prediction market founded by 26-year-old "prodigy" Shayne Coplan has already made the call for "Trump's victory." In the days following the election's "conclusion," discussions have erupted within the community about whether Polymarket belongs to the Ethereum ecosystem, hoping to regain some "face" for the Ethereum ecosystem by leveraging Polymarket's popularity.

Despite being favored by many big names like Vitalik Buterin and regarded as a "truth machine," the platform has also faced various controversies. This article aims to summarize the various doubts surrounding Polymarket, hoping to view this platform rationally. After all, the more popular it becomes, the more calm we need to be.

Political Stance of Founders and Investors

First, there are doubts about the political stance of Polymarket founder Shayne Coplan and major investor Peter Thiel.

On July 20, New York Times reporter Teddy Schleifer shared a group photo on Twitter. In the photo, Shayne Coplan stands out with his curly hair among a group of Republican representatives dressed in suits and slicked-back hairstyles. Other individuals in the photo include Donald Trump Jr. and Trump supporters like Omeed Malik and Shervin Pishevar. Based on the timing, the photo was likely taken during the Republican National Convention.

In addition to Shayne Coplan himself, the identity of major investor Peter Thiel, co-founder of PayPal and founder of Founders Fund, as a clear Trump supporter has also led to questions about "political bias."

Although Shayne Coplan has responded to these concerns, emphasizing that Polymarket maintains a nonpartisan stance and is not a political tool, and that Peter Thiel has no board seat or control, can such responses truly alleviate people's doubts?

There are also some reports that cannot be overlooked. According to Politico and its reporter Daniel Lippman, Shayne Coplan not only appeared at the Republican National Convention but also hosted an after-party for the Democratic National Convention. Additionally, Coplan was photographed with Democratic vice-presidential candidate and Minnesota Governor Tim Walz at a Harris campaign fundraising event.

Therefore, aside from the potential factor of "political stance," Shayne Coplan's actions may also simply be aimed at promoting Polymarket, serving as a pure "advertising campaign." As Bloomberg reported, Polymarket has gone to great lengths to gain attention. The platform distributed baseball caps branded with its logo to attendees during the Republican National Convention and hired individuals (for $1,050) to act as human billboards for promotion. Earlier this year, Polymarket also posted boxing-themed champion posters in Manhattan to promote Trump's odds against Biden. Furthermore, the platform announced in July that it had hired renowned political polling analyst Nate Silver as an advisor.

"Real Money Betting May Also Be Capital Manipulation"

In addition to doubts about the founders' political stances, the market has also questioned whether there is "capital manipulation" in Polymarket's election prediction market. On October 18, The Wall Street Journal reported that Trump's lead on Polymarket was actually a result of capital "hype." It pointed out that this surge could be an "illusion" caused by four Polymarket accounts. Miguel Morel, CEO of blockchain analysis firm Arkham Intelligence, also stated after review that these four accounts belong to the same entity, causing an uproar in the market.

However, according to recent reports, this "whale" is an investor from France who goes by the name Théo. In an interview with The Wall Street Journal, he stated that he had lived in the U.S. and previously worked as a trader at several banks. Théo indicated that his large bets were not based on "political stance," but rather to "make money," and that most of his invested funds were "available liquid assets." Additionally, Polymarket stated that after conducting an investigation, it concluded that the trader was betting based on "personal views on the election" and found no information indicating that the user manipulated or attempted to manipulate the market.

"Inflated Trading Volume"

After the official dismissal of the above possible "capital manipulation" concerns, can we really trust Polymarket, as Elon Musk said, because it involves "real money betting," making it more reliable than traditional polls?

In fact, the public has also raised doubts about the platform's actual trading volume. Blockchain risk analysis firm Chaos Labs released a report indicating that approximately one-third of the trading volume in presidential predictions may be wash trading, while Inca Digital found discrepancies between the reported trading volume for presidential election predictions on Polymarket's website and on-chain data. Inca Digital stated that the actual trading volume for the presidential election prediction market is about $1.75 billion, while Polymarket reported a figure of $2.7 billion.

As of now, I have not found Polymarket's response to this matter. Wash trading is quite common in Web3 applications; aside from the platform itself possibly engaging in behind-the-scenes operations for better data, the allure of "airdrops" can also attract many degens to "ambush" in advance, creating a false sense of prosperity. Earlier this September, The Information cited sources reporting that Polymarket was considering raising over $50 million through a token issuance, although Polymarket has yet to make a final decision, and there is no clear timeline for the token issuance.

If "wash trading" has become a common occurrence, should it be the same for Polymarket, which is laying out in the prediction market space? In my view, such practices could jeopardize the essence of the prediction market. When a large number of fake users flood into the prediction market, their choices do not represent real market sentiment. If the odds are similar, they may make arbitrary choices, but if there is a significant difference in odds, due to the nature of degens, they may think twice and choose the side with even a 10% chance.

"Superficially Complying with Regulations, but Actually Acting Recklessly"

In January 2022, Polymarket was fined $1.4 million by the U.S. Commodity Futures Trading Commission (CFTC) for "operating in the U.S. without registration." As part of a settlement agreement, the company promised to gradually cease operations in the U.S. and prohibit U.S. users from accessing the platform.

However, the reality is that, aside from a large number of U.S. users still being able to access the site through VPNs and other means, Bloomberg reported that Meta's ad library shows that Polymarket's owner Blockratize recently spent about $269,875 on Facebook and Instagram to run election ads targeting millions of U.S. users. Additionally, Polymarket's Senior Development Director Armand Saramout sought to establish sponsorship agreements with U.S. social media influencers in September. In recent weeks, Instagram influencers with large followings have been posting Polymarket-sponsored content using hashtags like #PMPartner and #PolymarketPartner. Although a Polymarket spokesperson confirmed that this was not intended to stimulate trading from U.S. visitors, it still gives the impression of "superficially complying while actually acting recklessly."

Conclusion

Polymarket's breakout is undoubtedly a significant boon for the Web3 industry, and we look forward to this decentralized prediction market platform becoming, as Coplan said, a "source of alternative news" or "the future of media." However, what Polymarket needs to consider now is that with the U.S. election concluded, and with such a major hot topic gone, how will it develop moving forward? Perhaps launching a token will be one of the ways it considers to maintain growth, but even if a token is launched, please do not forget the mission of providing the public with more accurate and real-time event predictions.

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