As the 2024 U.S. presidential election approaches, prediction markets have become a focus of the cryptocurrency industry.
Currently, former President Trump is performing well in the polls, especially after the recent assassination attempt, his approval rating has jumped to over 70%. This dynamic has not only attracted a large number of users to place bets, but also made participants in the cryptocurrency market full of expectations for the election results.
Behind all this, we can see the importance and potential of election prediction markets.
01
The election is closely related to the cryptocurrency community
Recently, the heat of the US election has continued to rise, not only attracting widespread attention in traditional political circles, but also causing quite a stir in the field of cryptocurrency.
Two of Trump's main fundraising channels, the Super PAC Trump 47 Committee and America PAC, submitted disclosure documents for accepting donations to the Federal Election Commission (FEC), and the donation details of many crypto industry leaders and crypto-friendly people were also exposed.
Data shows that between April 1 and June 30, brothers Cameron Winklevoss and Tyler Winklevoss donated more than $2.5 million to the Trump 47 Committee, becoming the largest donors supporting Trump.
Sequoia Capital partner Douglas Leone, former PayPal executive and Kraken co-founder Jesse Powell and others have also donated large amounts of money to Trump's campaign. For example, Douglas Leone donated $1 million to America PAC on June 14.
Research released by Coinbase on July 11 shows that crypto voters have a significant influence in key battleground states, with one in six crypto holders living in these states. These voters are young and diverse, with Generation Z and millennials accounting for 65% and non-white voters accounting for 35%. They are very active politically, with 90% of crypto voters planning to vote on November 5, and they are four times more enthusiastic about supporting crypto candidates than non-voters.
The rise of cryptocurrency voters has made them an important force in the US election. Candidates have begun to realize the importance of this group, and candidates such as Trump and Biden have expressed support for the development of cryptocurrency.
It can be said that the current US election has not only attracted much attention in traditional political circles, but also triggered extensive discussion and participation in the cryptocurrency field. Both supporters and opponents have shown strong concerns about the future policy direction in this process.
02
The prediction track has set off a climax
On February 19, 2021, Ethereum co-founder Vitalik Buterin wrote that prediction markets will become an increasingly important application on Ethereum.
Prediction markets allow users to bet on future events, using the odds of betting as a trusted source of event predictions.
Blockchain-based prediction markets such as Augur, Omen, and PolyMarket have shown their fascinating application prospects. Especially during the 2020 US presidential election, the prediction market transaction volume increased from almost zero in 2016 to millions of dollars, attracting more and more attention.
The advantages of prediction markets are that they incentivize accurate predictions, aggregate various information, provide real-time updates, reduce bias, and have high scalability. Compared with traditional opinion polls, prediction markets estimate the probability of events through the collective wisdom and betting of the public, which is cost-effective and more accurate. Especially in the field of cryptocurrency, decentralized prediction markets eliminate betting restrictions and allow users to make full use of their insights.
In June 2024, as the U.S. presidential election approaches, the crypto prediction market has once again become a hot topic.
Traditional prediction markets often limit the amount of bets on a specific outcome, while crypto prediction markets such as Polymarket, Augur, and Azuro Protocol break these barriers. Through blockchain and decentralized ledgers, these markets create transparent and fair global platforms where users can participate as traders, liquidity providers, or event creators.
Here are several major forecasting agencies and their performance and characteristics in the general election.
【Polymarket】
Polymarket is a blockchain-based prediction market platform that allows users to bet on predictions of public events, including the U.S. presidential election.
Founded by Shayne Coplan in 2020, the platform uses an automated market maker (AMM) mechanism to enable users to place bets with USDC. Polymarket supports login with credit cards and crypto wallets, making it convenient for traditional users.
In early 2024, Polymarket’s trading volume exceeded $50 million and it completed a $45 million Series B funding round led by Peter Thiel’s Founders Fund.
【Deribit】
Deribit, a leading cryptocurrency options exchange, recently launched Bitcoin and Ethereum options tied to the U.S. election.
New BTC and ETH election expiration options will allow traders to manage their cryptocurrency positions before and after the election results are announced. These options contracts, which went live on July 18 and will trade until November 8, provide investors with tools to hedge and speculate on volatility before and after the election results.
Deribit’s product is considered an effective way to hedge against uncertainty around election results, providing a three-day buffer during and after the election to help traders better adjust their portfolios.
【PredictIt】
PredictIt is an online political prediction market that allows users to place small bets on events such as the US election. The platform was founded in 2014 and is jointly operated by Victoria University in New Zealand and Aristotle International Inc, a political consulting firm in Washington.
PredictIt is different from other online gambling sites. It is mainly used for academic research and has obtained a legal operating license from the Commodity Futures Trading Commission (CFTC). PredictIt limits the maximum bet amount for each market to $850 and has attracted more than 30,000 traders. PredictIt users must be US residents and registered voters.
【Kalshi】
Kalshi is another US-based prediction market platform that recently launched event contracts on the prices of Bitcoin and Ethereum.
Users can place bets in U.S. dollars, rather than cryptocurrencies. Kalshi offers contracts that predict future prices for Bitcoin and Ethereum, which allows users to bet on a variety of market scenarios.
Kalshi allows users to bet on other events such as whether the Federal Reserve will raise interest rates, broadening the range of options for users. The platform continues to expand its product line and add betting services for multiple market events.
【BitMEX】
BitMEX is also expected to launch a prediction product for the US election, as its founder Arthur Hayes also pays attention to the US election and spoke: "What is the best crypto bill and how can we use the US election to pass it?"
At present, although there is no clear information showing that BitMEX has launched products related to the 2024 US election, its potential to launch market prediction products is worthy of attention.
Through these platforms, investors can speculate and hedge on their predictions of political events and take full advantage of the volatility of the cryptocurrency market. The unique advantages and operating mechanisms of each platform allow users to choose the platform that best suits them for betting.
03
A case worth noting: Polymarketx
Decentralized prediction market Polymarket recently announced that well-known statistician and election commentator Nate Silver will serve as its advisor.
It is reported that more than 262 million US dollars have been bet on the predictions of the US presidential election on November 4, 2024 on the Polymarket platform, and the overall trading volume has exceeded 400 million US dollars, accounting for more than 80% of the global US election prediction market.
It is worth mentioning that Polymarket has raised $70 million in two rounds of financing, with the most recent $45 million Series B led by Peter Thiel's Founders Fund and Vitalik Buterin also participating. In 2024, the platform made a forecast worth $202 million, demonstrating its huge market potential. Although there are currently no fees for makers and takers, this structure may change in the future.
summary
The decentralized nature of the crypto prediction market is also one of its main advantages.
Mechanisms such as smart contracts and arbitration pools increase transparency and prevent manipulation, ensuring the platform is fair and non-deceptive. Governance token holders can vote on disputes, creating an immutable and auditable record of decisions, which provides unique value to decision-makers in the public and private sectors.
While the public comment period unfolds and legal proceedings proceed, the future of prediction markets remains uncertain.
But overall, the prediction market has great potential in the cryptocurrency field. With the participation of more users and the advancement of technology, the prediction market will continue to develop and become an indispensable part of the Ethereum ecosystem in the future.
