Put Your Money Where Your Mouth Is: Polymarket and the Future of News

Modern society has an information problem: the more we have at our fingertips, the harder it is to tell what’s true. Trust in media and major institutions is at all-time lows, and younger generations are increasingly turning to social media for their news, where incentives favor engagement over accuracy. As information diets get noisier, we need new ways to find consensus.

Markets are great for this. They create financial incentives that drive participants to trade on the best information available. If new information indicates that an asset should be worth more than its current price, traders will buy it until the gap is closed. Thus true information tends to be profitable while false information tends to be unprofitable.

Prediction markets allow us to trade on the outcome of future events. With enough distribution, prediction markets have the potential to aggregate the best available information on what’s going on worldwide — filtering out false, unprofitable information and attracting true information — into a market price that reflects the collective insights of all their participants. We believe they introduce a valuable new tool for social and media networks: the ability to put your money where your mouth is.

A little over a year ago, months before the 2024 US presidential election, BCAP led a $55M financing round for Polymarket, the first prediction market platform to get mainstream adoption¹, valuing the company at $350M post-money. We had been following Shayne’s progress for many years, and after getting to know him and his team, we were convinced that Polymarket is a generational company that will redefine how we understand and engage with news. Shayne is a visionary leader with a rare product instinct and the focus and drive needed to achieve extraordinary outcomes.

In Q4 of 2024 (the months surrounding the presidential election), Polymarket did nearly $11B in trading volume², eclipsing its peers and, arguably, cementing itself as the best place to track the US presidential election. It correctly predicted the landslide outcome while poll-based models consistently claimed the race was an even 50/50. Not only was Polymarket more accurate than the polls, it also called the election in real-time, well before the media did.

There was lots of speculation that Polymarket usage would fall off after the election. Our hunch, supported by data showing that most election bettors were subsequently trading non-election markets, was that the platform was a lot stickier than it was getting credit for. This turned out to be correct. While there was a natural dip in volume in the months following the election, growth resumed and current active markets see strong volume across sports, macroeconomics, and geopolitics, driving roughly 3x year-over-year growth³ across both volume and monthly active traders.

Unlike most other prediction markets, Polymarket is a decentralized, non-custodial blockchain application that uses smart contracts to settle its markets, minimizing counterparty risk and making its markets accessible to a global audience. Polymarket also runs 24/7 and uses stablecoins for cheap, fast, and widely accessible payment rails. We view these as highly advantageous properties for prediction markets, which benefit from accessibility and efficiency. Polymarket has looked to leverage these characteristics to achieve scale where centralized prediction market platforms have struggled.

Shayne and his team have also built an intuitive application that abstracts away the complexities of crypto and makes it easy to understand for newcomers. Its markets are approachable, with prices intended to reflect the odds of a future event occurring, meaningfully lowering the level of sophistication required to participate compared to futures and options.

While Polymarket is simple enough for mass appeal, it’s also flexible enough to be useful to highly sophisticated investors. We see it becoming an important way to express extremely specific views via markets, thus greatly enhancing companies’ and investors’ abilities to manage risk and hedge against bad outcomes. Polymarket’s recent launch of public company earnings forecasts is a great example, as these markets let traders bet purely on earnings results while stripping out idiosyncratic risks to a company’s stock price. We think this is a killer product that could allow Polymarket to take market share in the multi-trillion dollar financial derivatives market — a massive opportunity on its own, but just one of the many categories of markets on Polymarket.

Unsurprisingly, the traditional finance world has taken notice, and several days ago, Polymarket announced a watershed deal with ICE, the parent company of the NYSE, that sees ICE investing $2B in Polymarket at a $9B post-money valuation. ICE will also begin distributing Polymarket data to thousands of financial institutions around the world, greatly increasing Polymarket’s distribution and network effects. The ICE deal follows a string of other key integrations, perhaps most notably X, which made Polymarket its official prediction market partner this past summer.

This is particularly important because Polymarket benefits from a powerful feedback loop, where greater reach on social, financial and media networks begets increased traffic and volume, which in turn should improve the accuracy of its predictions. Thus, it likely becomes a more useful and relevant source of information to share, and so on — with each turn increasing its network effect and defensibility.

While the network effect compounds with an increasingly powerful roster of distribution partners, Polymarket is also gearing up to launch in the US. It recently acquired QCEX, a CFTC-licensed derivatives exchange and clearinghouse, enabling the company to enter the US as a fully regulated platform. Until now, Polymarket has grown entirely ex-US, so entering the US marks a new chapter of growth for the company (additional information on the US launch here).

Over time, we believe Polymarket will become part of the fabric of modern media, social networks and financial markets. We’re also excited about its potential to address critical societal problems around information dissemination and improve the quality of online discourse. And above all, we’re incredibly proud of Shayne and his brilliant team and honored to work with them as they unearth the full potential of prediction markets.

Learn more about Polymarket here.

Thank you to everyone on the @blockchaincap team who contributed to this piece, including @pbartstephens and @h_joshua_rivera.