Polymarket has accumulated nearly $1 billion in bets on the United States 2024 presidential election winner.

Data from the platform currently ranks Vice President Kamala Harris, a Democratic presidential candidate, with a 50% chance of winning, backed by $135 million in wagers. Meanwhile, Republican candidate Donald Trump holds a close 49% chance, with bets totaling nearly $150 million.

Crypto’s role in the election has boosted activity on Polymarket, with both candidates showing interest in the sector. Harris’s team has indicated a shift from the current administration’s anti-crypto stance, while Trump has gained favor for his pro-crypto ventures.

With the election approaching, Polymarket has seen a surge in activity. Data from Dune Analytics shows over 40,000 traders are placing bets, driving up the platform’s volume by nearly tenfold compared to a year ago.

Challenges ahead

However, the decentralized platform must figure out how to sustain its volumes after the US presidential elections, according to a report from the Crypto.com exchange.

In a Sept. 16 thread on X, the exchange noted that the decentralized marketplace would face new competition as the sector matures, pointing out that the development of Solana-based BET poses significant challenges to its dominance.

Crypto.com emphasized the issue of liquidity in prediction markets, stating that BET by Drift introduces fresh competition. The report highlighted that BET benefits from existing liquidity on decentralized exchanges (DEXs), not just from prediction market competitors.

Due to this, the exchange noted that Polymarket has to grow its liquidity in sports or significant crypto events because “players with existing liquidity and horizontal expansion capabilities (e.g., DEXs) could be a serious contender in the [prediction] space.”

BET was launched in August on Solana as a competitor to the Polygon-based protocol. Since then, the platform has enjoyed considerable adoption, drawing around $25 million in total bets on the US elections.

Away from the BET’s threat, the platform also has to navigate a regulatory regime that might threaten its operations. The US Commodity Futures Trading Commission (CFTC) has proposed a ban on “event contracts” and is recently battling a lawsuit to ensure that Kalshi, a US-based prediction market platform, does not offer election-related betting.

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Solana-based prediction market BET has hit a new milestone of $20 million in its daily volume, according to Dune Analytics data.

However, a deeper look reveals a downward trend in BET’s trade count over the past three days, raising questions about how the $20 million volume was achieved.

Despite this, the milestone is noteworthy as BET launched less than two weeks ago. This suggests that BET successfully engages Solana users interested in blockchain-based prediction markets.

Notably, BET users have wagered more than $23 million across four political bets. Over $20 million of this is on Kamala Harris winning the popular vote in the upcoming election, while around $2.3 million is on Donald Trump winning the 2024 Presidential Election.

Prediction markets

Decentralized prediction markets like Polymarkets have grown in popularity over the past year, especially with the upcoming US elections. These platforms allow users to pool insights on future events, often offering less biased predictions due to the financial stakes involved.

For context, Polymarket has seen unprecedented growth, reaching its highest trading volumes and user participation for consecutive months.

However, the rise of these platforms has sparked debate about their role in public discourse. Some praise them as valuable social tools, while others argue they resemble gambling.

Ethereum co-founder Vitalik Buterin has praised prediction markets like Polymarket for their potential as “social epistemic tools,” arguing they provide a unique way for the public to engage in collective forecasting.

Critics, however, believe Polymarket’s election-related markets mirror traditional gambling more than unbiased forecasting, raising concerns that participants may use these platforms primarily for arbitrage opportunities between prediction markets and mainstream betting platforms.

Moreover, the US Commodities Futures Trading Commission (CFTC) and lawmakers, including crypto cynic Senator Elizabeth Warren, have raised concerns about the impact of these bets on public interest and called for their restrictions.

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Most crypto bettors on Polymarket, a decentralized prediction marketplace, do not expect the detained Telegram CEO, Pavel Durov, to be released this month.

Data from Polymarket indicates only a 39% chance of Durov’s release in August, with shares trading at 39 cents at press time. However, bettors are more optimistic about a release before October, assigning a 78% probability.

According to Polymarket’s data, these bets had gathered over $600,000 worth of positions as of press time.

Prediction markets allow users in different locations to pool insights on future events. Since participants have a financial stake, prediction markets often offer less biased predictions. These markets have gained popularity in the past year, especially with the upcoming US elections.

Legal challenges

Durov was arrested on Aug. 24, 2024, at Le Bourget airport near Paris and remains detained as part of a broad investigation.

The investigation covers serious charges, including facilitating illegal transactions, refusing to cooperate with law enforcement, involvement in child pornography and narcotics distribution, organized fraud, money laundering, and the unlawful provision of cryptographic tools.

French President Emmanuel Macron commented on the arrest, emphasizing that it was a legal matter, free from political influence. He said:

“The arrest of the president of Telegram on French soil took place as part of an ongoing judicial investigation. It is in no way a political decision. It is up to the judges to rule on the matter.”

At the same time, reports have emerged that his application for Telegram is being scrutinized in India. However, there is no immediate threat of a ban.

Reports stated that India’s cybercrime wing is investigating Telegram for its potential misuse in criminal activities, which could lead to a ban if deemed necessary.

Support for Durov

Meanwhile, Durov’s arrest has sparked significant attention within legal and crypto communities. Critics, including whistleblower Edward Snowden and tech entrepreneur Elon Musk, have condemned the arrest as an attack on free speech.

Similarly, crypto stakeholders like Ethereum co-founder Vitalik Buterin and Tron blockchain founder Justin Sun have spoken against the arrest.

Furthermore, the UAE has also stepped in and requested consular services for Durov.

Durov holds citizenship in several countries, including the UAE, France, Russia, St. Kitts and Nevis.

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DeFi protocol Drift has launched a prediction market called BET on the Solana blockchain, according to an Aug. 19 statement.

Drift Protocol co-founder Cindy Leow likened BET’s prediction market to perpetual trading. She explained that, just as perpetual traders bet on potential price changes in crypto, prediction markets allow for financial stakes in the outcomes of real-world events.

She stated:

“Taking real events into permissionless financialization opens up the door to bet on everything from making a hyperlocalized bet with a few friends to trying to predict the outcome of a US presidential election.”

BET features

BET operates similarly to Polymarket, allowing users to purchase YES or NO shares on an event like the upcoming US presidential election.

However, the Solana-based platform stands out by allowing users to use over 30 cryptos — including USDC and SOL, among others — as collateral. Users also earn a yield on their assets before the event’s outcome is determined.

Additionally, BET gives users the ability to hedge their predictions with “structured bets.” This feature allows them to take a long position in the prediction market while shorting Bitcoin. The platform also features a rewards system called FUEL, which is designed to boost trading activity and incentivize user engagement.

While BET is initially focused on the US elections, plans are underway to expand into other areas, such as Formula 1 and other crypto and cultural events.

Prediction markets’ popularity

Decentralized prediction markets have surged in popularity this year thanks to Polymarket’s success. These platforms allow users to bet on events, ranging from sports outcomes to geopolitical incidents.

Ethereum co-founder Vitalik Buterin has notably praised prediction markets as one of the leading social epistemic technologies of the 2020s. He said:

“[These markets are] truth-seeking and democratic, built around open public participation rather than pre-selected elites.”

However, the market’s growing popularity has drawn regulatory scrutiny. The US Commodities Futures Trading Commission (CFTC) and lawmakers like Senator Elizabeth Warren have expressed concerns about the impact of these bets on public interest and called for their restrictions.

Conversely, critical players in the crypto industry, such as Coinbase and Gemini, oppose these regulatory moves, arguing that they are economically flawed.

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