- Just a fraction of Polymarket’s wallets profit.
- Whale traders dominate the platform.
- Trading activity is not slowing down.
The decentralized Polygon-based prediction platform Polymarket has gained significant attention recently. Ahead of the coming US election, the platform saw a $1 billion in total betting volume on this event alone.
Traders are excited about the possibility of betting on real-world events, especially on those with great significance. However, despite its popularity, recent data shows that most traders are losing money. Namely, just 12.7% of the wallets on Polymarket reported realized profits since.
Why Most Polymarket Betters Lose Money
Polymarket has gained significant attention ahead of the upcoming US election. However, its track record for traders leaves much to be desired. On October 10, data by LayerHub showed that out of 176,076 wallets that interacted with Polymarket, 87.3% reported losses.
Most of these wallets bet small sums and reported less than $100 profits. Just 2,148 wallets made over $1,000 in profits on over 10.79 million bets on the platform. There are several reasons for this low profitability, with low liquidity as the key issue.
While popular bets like the US election winner have significant liquidity, this is the exception. According to a recent report by Crypto.com, most bets on Polymarket have low liquidity. This means that very few counterparties match the size of trades. Low liquidity leads to price slippage, where traders have to execute trades at less favorable prices.
Polymarket Faces New Competition
Despite Polymarket’s dominance in the prediction market, the platform may be more fragile than it seems. In August, the platform reached a $473 million trading volume. However, according to Crypto.com’s report, 91% of this volume is tied to the US Presidential election.
In contrast, some of Polymarket’s competitors have much better access to liquidity. This includes the Solana-based BET platform, powered by Drift perpetual futures exchange. BET’s main advantage is the access to $500 million in liquidity from Drift.
By offering more liquidity, these platforms can help make the prediction markets more efficient and profitable for users.
On the Flipside
- In July, the D8X exchange enabled users to leverage their Polymarket bets. However, this has caused concerns, especially because of the risky and unpredictable nature of these positions.
- Betting markets like Polymarket also have a role in gauging the likelihood of future events. For instance, Polymarket odds predicted President Joe Biden would drop out of the race.
Why This Matters
Polymarket’s past track record is crucial for traders who want to engage with betting markets. It shows that even if traders predict the outcome, they may face challenges in realizing their gains.
Read more about Polymarket’s token launch:
Polymarket Mulling Token Launch in Hunt for New Funding: About Time?
Read more about Solana’s latest performance:
Solana Dominates Token Launches With 87% Market Share
