Messari: Polymarket’s resilience after the US election

Author: Austin Weiler, Messari Research Analyst; Translated by 0xjs@黄金财经

Polymarket is one of the darlings of the cryptocurrency space in 2024.  It initially attracted attention with a unique value proposition, providing users with the ability to profit from various market predictions - a product that was previously mainly associated with sports betting. This differentiator enables users to access and profit from predictions in various markets such as entertainment, business, and science.

However, the US election is a major event that everyone wants to predict and profit from. This is not limited to the results, but also includes the margin of victory in specific states, whether Biden will be replaced, what Trump will say at the next rally, and so on. The hype around the election helped Polymarket's monthly trading volume surge 42 times between January and October 2024.

While this unprecedented growth is impressive, many believe that Polymarket's success is driven by the election and predict that its usefulness will eventually decline after the election. Now, nearly a month later, market volume and unique user metrics on Polymarket suggest that it can and will remain useful for the long term.

As expected, Polymarket gained significant momentum in the month leading up to the election. During that 30-day period (October 6 to November 5), Polymarket saw record daily volume, with an average daily volume of $103 million.

 After the election, it was widely expected that volume would fall back as retail investors focused primarily on markets related to the U.S. election. Indeed, average daily volume fell to $58 million between November 6 and November 30, down 44% from the peak of the 30-day rolling average. While this decline is significant, it is not as large as it appears if we zoom out further. Non-US election-related market volume totaled $1.6 billion in November. This is higher than any single month between January and September 2024. While this short-term outlook is no guarantee of survival, it is a positive initial indicator that Polymarket has sufficient product-market fit to sustain future growth.

To maintain this momentum, Polymarket must continue to improve its product, especially in the absence of major prediction events such as the US election. In addition, the prediction market space is likely to attract more competition, both new entrants and existing players. To ensure sustainable growth, Polymarket should focus on:

• Provide more features for users, including syndication and cross-market syndication (e.g., combining political event predictions with sports events).

• Highlight unique features that differentiate it from competitors (Web2 and Web3), such as the financialization of predictions.

• Explore other blockchain products beyond Polygon.

• Continue to improve their user experience to attract a wider audience.

Polymarket’s journey is far from over, and although the road ahead is challenging, signs point to its resilience and adaptability.