Polymarket Is Huge Success for Polygon Blockchain – Everywhere But the Bottom Line

One of many greatest breakout successes this yr for the group behind layer-2 blockchain Polygon is Polymarket – the decentralized prediction market that customers have flocked to this yr to position bets on every part from presidential politics to the conclusion of an HBO documentary.

What’s much less clear for crypto analysts inspecting Polygon’s efficiency metrics is whether or not the coup will carry reduction to holders of the venture’s distressed tokens. down 65% this yr.

Polymarket has grow to be extraordinarily in style amongst common customers, permitting them to guess on the upcoming US presidential elections. Poly market bettors have added practically $2.4 billion on the query of whether or not that’s the case Donald Trump or Kamala Harris will win the November elections. Gamblers have additionally just lately created a market the place they just lately debuted HBO documentary about Bitcoin would try to identify Satoshi Nakamoto as the inventor.

Polymarket is constructed on the Polygon PoS blockchain and the appliance is likely one of the first main natural successes for the group – recognized for a earlier advertising and marketing technique of paying companions corresponding to Starbucks to make use of the community.

Given the large enhance in utilization of the appliance, why has the Polygon group delivered solely a small quantity in greenback figures, and barely any enhance within the worth of the unique POL token?

As of October 23, Polymarket has solely collected about $27,000 in transaction charges for Polygon PoS in 2024, in response to knowledge from Token Terminal.

The reply, partially, is that the charges are aggressive. And recently, transactions on Polygon PoS have been extraordinarily low-cost.

The typical transaction price on the Polygon PoS chain on the identical day was $0.007.

Each time a Polymarket consumer locations a guess, he creates a transaction on Polygon PoS. As a part of these transactions, they pay charges to Polygon PoS, which is break up right into a base price and a precedence price. The bottom price doesn’t go to validators; as a substitute, it’s burned – despatched to a zero tackle that ought to theoretically profit token holders by serving to cut back provide.

“That base price is adjustable and is predicated on community congestion,” Marc Boiron, CEO of Polygon Labs, informed CoinDesk in an interview. “In order the community turns into extra congested, the bottom charge will increase.”

The precedence price is paid to a validator.

“You pay the validator to say please embody me in a block,” Boiron added. “The upper the price you pay, the earlier the validator will embody you in a block if there are extra visitors jams.”

If there may be ample block house, you’ll have to pay much less.

One other downside is that whereas Polymarket’s gamblers are fairly lively, the amount of transactions within the grand scheme of issues would not come near the extent of high-intensity purposes like decentralized crypto exchanges (DEXs).

To this point this month, 5.2% of transactions on the Polygon PoS chain got here from Polymarket, in response to Polygon’s analysis group. Chainlink accounts for 10.38% of transactions on PoS, whereas transfers of the stablecoin USDT make up 4.89%.

To take the instance of a current day’s exercise. As of October 23, Polymarket was answerable for roughly 8% of the “fuel” used on Polygon PoS, based mostly on knowledge from the blockchain explorer PolygonScan. This made it the most important particular person contributor. In blockchain terminology, fuel is a measure of the computational depth required for a given batch of transactions.

“I have a look at the way it was constructed,” says Boiron. “I might by no means count on a lot price from Polymarket as a result of it would not supply as many compounding choices as Uniswap does. It has some, however not many. It is truly simply customers who come there. They execute a transaction after which cease. So it is going to inherently by no means drive that a lot till the variety of customers soars.

Consideration is the reward

Polygon has lengthy awaited its mainstream breakthrough second, pouring hundreds of thousands into partnerships with Starbucks and Meta to attempt to carry Web3 to the lots. These offers by no means actually received off the bottom.

The Polygon group is inspired by the large consideration Polymarket has acquired, hoping the eye will result in larger numbers within the broader Polygon ecosystem.

Boiron informed CoinDesk: “The query is: why is Polymarket so attention-grabbing in the event that they solely make $20,000? The apparent cause is: let’s draw consideration to it.

The success exhibits that “you may have an extremely profitable app on Polygon PoS the place, similar to you may, you barely know you are utilizing a blockchain,” he mentioned.

To look on the brilliant aspect, “Frankly, paying simply $20,000 in transaction charges simply displays how low-cost it’s to make use of Polygon PoS,” Boiron mentioned.

Polymarket’s natural explosion has contributed to Polygon’s success due to the eye it pays to the ecosystem, he mentioned.

“Totally different purposes have totally different roles,” says Boiron. “For me, Polymarket’s function consists of this: we give them tremendous low-cost transactions that make it very simple. And a spotlight is what – that’s the added worth – that Polymarket brings to us.”

“That is very totally different from, as an instance there’s somebody who comes and builds an order e-book DEX on Polygon PoS,” he mentioned. “In the event that they had been to obtain $20,000 in charges over a number of months, that will be an enormous failure, as a result of should you count on big numbers of orders positioned and canceled and fulfilled, then that will imply big numbers of transactions. So the important thing right here is: totally different purposes have totally different meant functions.

Learn extra: Polymarket reportedly seeks $50 million in funding, considers token as election bets rise