The 2020 Elections Are Boosting Crypto Prediction Markets

The 2020 Elections Are Boosting Crypto Prediction Markets
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In just over three weeks, the trading volume on decentralized betting platform went from zero to almost $3 million. 

As of Monday, Polymarket’s had over $2.8 million worth of bets placed, with each bet (for possible answers “yes” or “no”) costing less than a dollar. The platform allows users to place crypto bets on highly-debated current events and public topics including politics, pop culture, business and health, according to its . 

Polymarket is a non-custodial platform, meaning it does not hold or store user-funds, and bets can be placed in the dollar-backed stablecoin . 

Prediction markets, where users can bet on the outcome of future events, are a key application of Decentralized Finance (), which allows users to conduct financial transactions with low fees and without a middleman. Elections and political debates attract high numbers of traders to these platforms; decentralized prediction platform Augur five years ago, but struggled to take off until gave it a push in 2018. 

“To me, the presidential election is the Super Bowl for prediction markets. Every single one is experiencing a massive uptick in volume. It’s only natural that crypto follows suit,” David Liebowitz, vice president of business development at , told CoinDesk via Telegram.  

Elections also seem to attract new users to crypto betting platforms.  

“There are people who are using it, who aren’t even crypto native users. They don’t even fully understand crypto but they’re still using Polymarket,” said Shayne Copland, founder of Polymarket.

Just over a week ago, Polymarket it had secured $4 million in its latest round of funding, attracting high profile investors from the industry. Augur its new and improved Version 2 in July this year.  

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Users are looking at a number of betting and prediction markets in the runup to Tuesday’s election. Anonymous crypto betting platform YieldWars launched its last night and has since attracted over $50,000 in bets. Users can stake either the platform’s native $WAR token or $ETH. 

YieldWars’ co-founder, who goes by , told CoinDesk via Telegram that the sudden rise in volume is far from shocking given the scale and importance of the election. 

“Crypto-based prediction markets should be flourishing on blockchain right now but have failed to deliver up to this point. The election has breathed life into prediction markets but what is going to happen when it ends? Are people going to be as enthusiastic about them?” Owl said. 

Owl also said YieldWars may have found the “secret sauce” to keep people interested in betting, by creating Battle Royale-style tournaments for betting, ideal for sporting events. The election face-off is a one-time battle, where two pools are running simultaneously, one in each currency. 

The platform has partnered with Everipedia to use Associated Press (AP) election data for resolving its election betting market.

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In October 2020, the reputed wire-service AP, in a first, Everipedia to create Oracle, an immutable record of 2020 election results on a blockchain.  

“I don’t think there could be a more trusted source than the AP and seeing that the Oracle was built using infrastructure, it was only logical to go with this option,” Owl said.  

According to Liebowitz, blockchain has long been viewed as the best platform for prediction markets to thrive. But centralized betting platforms like are still leading the game. PredictIt has 214 “markets” or betting scenarios compared to the new-kid-on-the-block Polymarket’s . As of Monday, PredictIt’s top event “” had 116.7 million shares traded. 

Copland declined to say how that compared to Polymarket, calling it a “bizarre metric” adding his platform only tracked dollar-trading volumes, and it did not have an equivalent.

Then, there is the expectation that elections will boost betting volumes. 

“It’s only going to get bigger from here, especially four years from now when the next election comes around,” Liebowitz said. 

According to Copland, the demand for blockchain-based betting markets has always been there. 

“It was just clear that there was a lot of demand for this. I would say, the past week or two, the demand has actually materialised. Still, these are just the very early days,” Copland said. 

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