Riding high on U.S. election betting fever, the crypto-based prediction market platform Polymarket is looking to secure $50 million in new funding, according to an article reported by The Information on Monday.
The New York-based startup is also exploring the possibility of launching its own cryptocurrency token, the article notes, citing sources who preferred to remain anonymous. Potential investors in this funding round would be offered warrants, granting them the option to purchase tokens if Polymarket decides to proceed with this token issuance.
According to the article, Polymarket aims to utilize the prospective token to enable users to validate the outcomes of real-world events.
It was not immediately clear whether this would be a supplement, alternative, or replacement for UMA Protocol, the “oracle” service Polymarket uses to resolve markets and adjudicate disputes via community votes. The Information did not mention UMA, and its token was up slightly following the article’s publication.
“Polymarket, at its core, is oracle agonistic,” the prediction market startup says in its documentation.
Neither Polymarket nor UMA responded immediately to CoinDesk’s request for comment.
In May, Polymarket revealed it had raised a combined $70 million over two rounds, one for $25 million and a $45 million Series B led by billionaire Peter Thiel’s Founders Found.
The Information article did not specify whether investors in the proposed $50 million round would receive equity or just the token warrants, and mentioned nothing about Polymarket’s valuation, which has not been disclosed.
Polymarket is one of this year’s breakout success stories, both for the long-obscure niche of prediction markets and for crypto itself. Bets made through the site are programmed into smart contracts on the Polygon blockchain and settled in USDC, a token that trades 1:1 for dollars.
Monthly volume on Polymarket hit an all-time high of $472 million in August, and this month is shaping up to be at least its second-best, with $397 million in trades as of Monday, according to Dune Analytics data.
Traders can use Polymarket to bet on the outcomes of everything from soccer matches to tensions in the Middle East, but the most popular subject by far is the U.S. presidential election, on which bettors have staked nearly $1 billion.
Under a regulatory settlement, Polymarket blocks users with U.S. IP addresses, although crafty American traders have reportedly gotten around the geofencing using VPNs.
The startup’s runaway success this year has been a sore point for Kalshi, a regulated, dollar-denominated prediction market that’s been fighting a protracted court battle with its supervisor, the U.S. Commodity Futures Trading Commission, so it can list contracts on which party will control each house of Congress. The agency has been considering a proposed rule that would ban election event contracts at all the exchanges on its watch, which would push regulation of such activity to the states.
CFTC Chairman Rostin Benham last week said he’s got an eye on offshore election-betting platforms that are “providing exposure to U.S. customers.”
“If anyone, Polymarket or otherwise, conducts themselves in a way that breaks the law, we will use our civil enforcement authority to make sure that conduct stops,” Behnam said in response to a question at an event in Washington, Bloomberg reported.
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