I recently learned that political polls have over time become more and more unreliable. People participating in polls has been decreasing significantly. I mean seriously, when was the last time you answered a political poll? Personally, I never had the pleasure. There has, however, been a shift away from polls and towards a market-based approach.
Baby Billionaire: Shayne Copland
https://www.thestreet.com/.image/t_share/MjE4MzA3MTE4NTk4NDY1MTI2/shayne-coplan.jpg
Meet Shayne Coplan , the youngest self-made billionaire at 27. You might be wondering what remarkable contribution he made for the world to value him as one of its wealthiest people. Well, he created Polymarket. Polymarket is essentially a crypto-based betting platform where users can place wagers on a variety of different categories.
Here is what you are greeted with when you first open the website. As you can see, we are currently looking at the trendiest bets. What’s astonishing is the sheer amount of money circulating on this platform.
I used the total trade volume filter, and here are currently the biggest bets on the website. I’m not surprised that the Super Bowl and F1 sports events are at the top, but what piqued my interest is that political bets are also massive.
This is how it works… Polymarket explains it in 3 simple steps:
Step 1: Choose a market. Maybe, you think you have some niche knowledge that will make you some money!
Step 2: Adding money (crypto) to your wallet and place a bet.
Step 3: Either wait to see if your bet was correct, or sell your position.
What makes it especially interesting for me is that you don’t have to be right strictly about the outcome to turn a profit. The genius of the platform is that it allows both speculative traders who buy and sell based on price changes and those who hold until resolution. For example, if I make a bet today worth $5 and tomorrow it doubles, I can either sell or hold my position. Polymarket accommodates both trading strategies.
Implications:
Markets factor in all available information, even insider information. This is a big issue here because insider trading regulation cannot be applied to Polymarket as it isn’t regulated by an institution like the SEC. Moreover, people involved in these bets can rig outcomes and make a lot of money. For example, if people bet on me falling down the stairs at Lipsius, and most people say I won’t, I could bet on myself falling and then actually stumble down the stairwell knowing I made a few million.
The legality of this operation is questionable, but the payout system is quite interesting. Firstly, Polymarket operates out of Anguilla to avoid the U.S. Commodity Futures Trading Commission (CFTC). Secondly, they use crypto because it’s technically not money. Thirdly, they aren’t registered; they operate using code.
UMA Optimistic Oracle is how Polymarket figures out what actually happened in the real world. When an event ends, say “Did the Fed raise rates?”, someone submits the answer (Yes or No) to the oracle. Then the oracle waits a day. If no one disputes, that answer is accepted automatically. If someone disagrees, UMA token holders vote on what’s true. Whoever lied loses money, so people are financially motivated to tell the truth. It’s like a decentralized referee that decides who wins each bet.
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