Polymarket, a decentralized prediction market platform, is reportedly seeking to secure $50 million in a new funding round and is considering launching its own token. This potential development could mark a significant moment in the crypto space, especially as the market continues to recover from its downturn in 2022.
Other investors in the round will likely receive token warrants that are not a claim to ownership in the token, but a warrant to purchase tokens in the future. Investors are still unsure whether they will receive equity in addition to token warrants.
Token Plans
The new token could allow users to vote for the outcomes of actual events. It is still unknown if this token will complement or replace Polymarket’s current use of the UMA Protocol, which relies on the community vote to finalize market outcomes.
Rise To Prominence
Since it arrived on the Ethereum layer-2 network Polygon in 2020, Polymarket has topped $1 billion in trading volume, primarily due to the US presidential election.
As of today, the market cap of cryptocurrencies stood at $2.18 trillion. Chart: TradingView.com
Major media sources such CNN and Bloomberg, who have included Polymarket’s statistics into their election coverage, have drawn interest to the site. Polymarket boasts more than 65,000 monthly active traders with total value locked of over $121 million as of September 2024.
Image: The Defiant
Regulatory Scrutiny
The success of Polymarket has also attracted regulatory attention, notably from the Commodity Futures Trading Commission (CFTC). Platforms providing offshore election betting to US clients run the risk of being subject to enforcement action, according to the CFTC, should they be caught breaking US law.
The influx of cash may be just enough to draw enough users into their decentralized prediction system in order to gain scale and take market share. A token launch may motivate users to keep using the network thus increasing liquidity and growth.
The US Election
With the US presidential election just around the corner, there is an air of anticipation surrounding Polymarket. Meanwhile, Polymarket reports that Vice President Kamala Harris has the best odds of any candidate in the 2024 election, at 50%.
The fate of its decisions will no doubt be watched over by many eyes, depending on how Polymarket will deploy its potential crypto and what the subsequent effect will have on prediction market as a whole. For Polymarket, it will be critical to synergize innovative funding mechanisms transcending regulatory obstacles.
Featured image from The Information, chart from TradingView
