30s Summary

Polymarket has settled its Presidential election contract, a $3.6 billion market that mainstreams prediction markets, following the announcement of Donald Trump’s historic reelection as US President. The final outcome was proposed to its oracle and resolution source, UMA, for dispute resolution. ‘Theo’, a French financial professional, registered multiple accounts on Polymarket, making over $47.5 million by staking on pro-Trump positions. However, Columbia’s Barnard College Professor of Economics cautions about using prediction markets as forecasting tools, emphasizing the need for careful data analysis for a complete understanding.

Full Article

Polymarket has finally settled its Presidential election contract, a massive $3.6 billion market that introduced prediction markets to the mainstream audience. This occurred just after 11 am eastern time, shortly after the Associated Press and NBC confirmed Donald Trump as the election winner.

According to the market rules, the Associated Press, NBC, and FOX News all had to announce the election result. Fox News’ Decision Desk was the first among these to call it.

Polymarket’s contract, which asked users to predict the outcome of the 2024 election, saw a whopping $3.6 billion flow through its virtual pipes. The betting contract came to a close following the announcement of Donald Trump’s historic reelection as U.S. president.

The final result was announced a short time after the market conditions were met and after Trump’s landmark election as the winner. This small delay was due to Polymarket having to propose a resolution from its current oracle and resolution source – UMA. The UMA’s dispute resolution system allows anyone to challenge the proposed market outcome by posting a bond during a 2-hour challenge period. If challenged, UMA token holders then vote to determine the final resolution.

A French financial professional, using the pseudonym ‘Theo’, was the biggest winner of the evening. He profited by over $47.5 million across the Presidential election contract, the popular vote contract, and several swing state markets. Theo’s betting methods included registering multiple accounts on Polymarket, all staking on pro-Trump positions which were thought by critics of prediction markets as a dark money attempt to influence public opinion.

On a slightly different note, Rajiv Sethi, Professor of Economics at Columbia’s Barnard College, has urged caution in viewing prediction markets as a more accurate form of forecasting than traditional polling. He points out that whether prediction markets are more accurate on average than statistical models can only be determined with data; logic alone isn’t sufficient. He suggests that factors like transaction observability, KYC requirements, participation restrictions, and position limits all impact prediction markets, and the effects of these on the market require careful data analysis over time for thorough understanding. As per on-chain data, close to 74% of Polymarket’s volume has come from election-related betting.