Polymarket’s ties to cryptocurrency breaks with past iterations of prediction markets and could give the exchange a leg up on rivals when it comes to building cost-efficient scale.
That’s the take of ARK Investment Management Chief Futurist Brett Winton who recently highlighted some of the advantages Polymarket is accruing via its use of digital currency. Event contracts on Polymarket are purchased via the Polygon cryptocurrency, which is based on the Ethereum blockchain. Previously known as Matic Network, Polygon is the 42nd-largest cryptocurrency by market value. Polymarket’s use of Polygon offers the speed traders crave.
Compared to the infrastructure associated with past prediction markets, smart contract blockchains now allow them to scale inexpensively,” observes Winton. “Thanks to Polygon’s proof-of-stake network, a Polymarket trade settles in seconds for less than $0.01 in gas fees, allowing thousands of traders to supply liquidity without intermediaries.”
The ARK strategist points out that last year, Polymarket’s betting volume was $9 billion, but its network fees were just $102,000, indicating there are “cost advantages of public blockchains” and efficiencies relative to traditional wagering exchanges.
Polymarket Rivals Embracing Crypto, Too
With prediction markets experiencing exponential growth powered in large part by sports event contracts, more are embracing cryptocurrency. That includes Polymarket rival Kalshi. Last month, Kalshi said it would allow clients to fund accounts with Solana, the sixth digital currency the operator permits for account funding purposes.
Polymarket has been allowing customers to fund accounts with Solana since March. Kalshi provides non-crypto funding avenues, such as bank transfers and debit card deposits. However, prediction market operators and their clients see advantages with cryptocurrency deposits because those funds appear in customer accounts in a matter of minutes, meaning contracts can be bought immediately.
That’s another advantage purveyors of event contracts exchanges have over standard sportsbooks. While some gaming companies have expressed interest in accepting deposits in crypto, the companies acknowledge it’s a tough road to travel with state regulators. The payment methods online sportsbook operators can accept are determined by states, not the gaming companies themselves.
Polymarket AI Ties
Prediction markets’ increased intersection with artificial intelligence (AI) could create other efficiencies, including reduced friction between the yes/no sides of a trade. Polymarket recently announced a partnership with Grok — the AI assistant on social media site X. That was a deal Kalshi previously thought it wrapped up.
It’s not yet clear exactly how the Grok/Polymarket relationship will develop, but ARK’s Winton sees the potential for AI-enhanced liquidity driving more capital into prediction market segments that have been sparsely traded and the possibility of better surface market odds increasing user engagement.
“AI agents should increase the breadth and utility of prediction markets significantly. Grok-powered assistants could watch live data streams, spin up micro-markets in seconds, and auto-quote two-sided liquidity, collapsing the friction that has limited prediction markets to marquee events historically,” adds the ARK strategist.
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