Polymarket: how the largest prediction market in the crypto industry works
Following the strong rally in 2025, the cryptocurrency market entered a correction, losing around one-third of its total market capitalization. However, prediction markets proved to be one of the few sectors of the crypto industry to maintain positive momentum during this period.
Over the past year alone, trading volume on prediction markets increased more than fifteenfold and, as of May 2026, exceeded $212 billion.
One of the key players in this segment is Polymarket, which accounts for more than one-third of the entire prediction market volume (nearly $86 billion).
What is Polymarket?
Polymarket is a decentralized prediction market platform that allows anyone to place bets on various real-world events. Unlike traditional bookmakers, Polymarket is not focused on a single betting category but instead covers a broad range of events, including:
- Changes in the prices of currencies, cryptocurrencies, and traditional financial assets;
- Political events such as presidential elections and government decisions;
- Weather-related events;
- Sporting events and tournament results;
- Corporate developments and technology news;
- Events related to science, space exploration, and artificial intelligence;
- Major corporate deals and much more.
Although Polymarket has become the most recognizable prediction platform, it is far from being the first project of its kind in the cryptocurrency market. The first decentralized prediction platform was Gnosis, launched on the Ethereum blockchain in 2015 — five years before Polymarket.
Polymarket itself was launched in 2020. Its founder, Shane Coplan, aimed to create a decentralized forecasting platform in which market prices would reflect the true probability of outcomes more accurately than expert opinions and analytical forecasts.
The idea proved successful. Analysts, journalists, investors, and traders increasingly reference Polymarket as a source of market sentiment. For many experts and users, the platform has become a real-time forecasting tool that tracks the evolution of collective expectations. This has been one of the main reasons behind Polymarket's popularity.
Several Polymarket forecasts have proven more responsive than traditional public opinion polls. For example, following Joe Biden's poor debate performance in the summer of 2024, Polymarket participants began pricing in the possibility of his withdrawal from the presidential race before major U.S. media outlets seriously discussed it. This further strengthened Polymarket's reputation as a real-time indicator of collective expectations.
At the time of its launch, however, the cryptocurrency prediction market was already dominated by Gnosis and Augur, so Polymarket initially struggled to attract significant attention.
The platform first gained widespread recognition through a highly publicized prediction market focused on the rescue operation involving the infamous Titan submersible.
The market dedicated to the search for the Titan became one of Polymarket's first viral events. Trading volume for this market exceeded $2.3 million, while interest in the platform surged as the tragedy received extensive coverage in global media. According to DL News, the Titan story led to a record increase in Google searches for the term "Polymarket."
Polymarket achieved mainstream recognition in 2024 during the U.S. presidential election campaign. In the same year, betting volume on the platform surpassed $3 billion.
As Polymarket's popularity grew, it also attracted regulatory attention. In 2024, authorities searched the apartment of its founder following a series of large wagers placed on the outcome of the U.S. presidential election.
However, in 2025, Polymarket received regulated exchange status from the Commodity Futures Trading Commission (CFTC), further strengthening its position in a market where it had already overtaken previously dominant competitors.
In February 2026, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), partnered with Polymarket to launch Polymarket Signals and Sentiment. This service provides probability-based data feeds designed for professional traders and institutional investors. Google Finance also integrated data from Polymarket Signals and Sentiment.
How does Polymarket work?
One of Polymarket's defining features is that users always bet on only two possible outcomes: either an event happens, or it does not (1 or 0). This distinguishes Polymarket from traditional bookmakers, which offer wagers on multiple possible outcomes — for example, how many goals a football player will score or whether a specific team will score in the first half.
However, users can create such specialized events themselves, allowing other participants to place bets on them. This is another unique aspect of Polymarket: any user can create a prediction market through the blockchain.
Polymarket operates on the Polygon Layer-2 network, which is reflected in the project's name. The platform does not have its own native token; instead, it uses the stablecoin USDC as its primary settlement asset.
Betting on Polymarket also differs from conventional wagering platforms. Instead of traditional odds-based bets, Polymarket facilitates the trading of "shares," which function similarly to blockchain-based equities.
Each market contains shares representing both positive and negative outcomes. Users purchase the shares corresponding to the outcome they believe will occur. The price of each share ranges from 0 to 1 USDC, depending on supply and demand, and is represented by two blockchain-based tokens.
The first token on Polymarket represents a positive outcome ("Yes"), while the second represents a negative outcome ("No"). These assets exist as non-fungible tokens (NFTs) on the Polygon blockchain.
For example, if the price of a "Yes" token on Polymarket is 0.3 USDC, this implies that users estimate the probability of the event occurring at 30% and the probability of it not occurring at 70%. Each token on Polymarket is backed by collateral.
The future of Polymarket
In the first quarter of 2026 alone, Polymarket recorded a trading volume increase of more than 26%, representing a 90% rise compared with the previous quarter. At the same time, the prediction market industry as a whole continues to gain momentum.
Growth is visible not only on Polymarket but across the entire prediction market ecosystem. According to the Pew Research Center, the combined monthly trading volume of the largest prediction platforms increased from less than $5 billion in the autumn of 2025 to nearly $24 billion in April 2026. This trend suggests that prediction markets are gradually evolving into an independent segment of the financial industry.
According to estimates by research firm Bernstein, the prediction market sector could surpass $240 billion in volume by the end of 2026 and reach $1 trillion by 2030.
Polymarket remains the dominant platform in the prediction market industry. However, according to Dune, its closest competitor, Kalshi, trails only slightly behind, with volumes of $83.7 billion versus Polymarket's $85.9 billion. The next-largest platform, Opinion, lags significantly, with trading volume just above $24 billion.
The scale of Polymarket is also supported by academic research. According to a study published on SSRN, researchers analyzed more than 588 million trades and over 2.4 million Polymarket users. The authors concluded that Polymarket prices aggregate information efficiently and can serve as a useful tool for estimating the probability of future events.