Polymarket founder Shaye Coplan has discussed at length the integrity of the prediction platform. Taking to microblogging website X, Coplan responded to a piece by the New York Times, reiterating the polygon-based platform’s non-partisan stance.
The New York Times released an article about the platform’s 64% odds of presidential candidate Donald Trump winning the election. It mentioned how it has enjoyed support from fellow Trump supporter and Tesla billionaire Elon Musk.
However, Coplan has clarified that the betting platform is not a political website, even though it has enjoyed much attention due to the elections. He said that the goal of the platform remains to use the power of the free market to demystify real-world events that matter to people.
In his statement, Coplan said that the platform provides a reality check in a world where users are kept engaged by reinforced opinions through algorithms. This means that the website only reveals real data that represents the real position of the market. “We’re just market nerds who think prediction markets provide the public with a much-needed alternative data source, ” he said.
Coplan agreed that the platform’s popularity was boosted by the United States elections, reiterating it is a responsibility the platform does not take lightly. Although Polymarket has been in the betting scene for a while, its patronage shot up recently due to its correct prediction about US President Joe Biden dropping out of the presidential race.
Despite its popularity, there is a consensus that the platform has failed to reflect public opinion in the US elections. Crypto founder Angela Steffens has disagreed with the CEO’s talk about the platform being a reality check. She mentioned that the bettors do not determine what will happen in the elections because most of them are not US residents. However, she clarified that Polymarket might be a good source of information for the people.
Polymarket refutes market manipulation allegations
Coplan has also denied allegations of market manipulation due to influence from external sources. In his tweet, he clarified that the platform is not under the control of Venture Capitalist Peter Thiel. Although Thiel’s VC Founders Fund has a minority stake in the company, it does not translate to him controlling what happens on the platform, since it is entirely transparent.
He added that the platform runs a peer-to-peer system open to the public. He notes that the activities are more transparent than traditional finance, where only the operator sees data hidden from the public.
Coplan explains that the platform is only in charge of setting the price, and it allows people to determine where they want to be by buying into that side of the market. Meanwhile, the firm had earlier refuted claims of market manipulation when news filtered in that one person owned four accounts and used them to sway the odds in favor of Trump on the platform.
After its investigation, Polymarket realized that the bettor was a French resident in support of Trump. The French resident was said to have placed his bets based on his personal views, splashing $26 million on the Democrat presidential candidate.
The platform’s trading volume hits $2.4 billion
The attention the platform is enjoying has boosted its trading volume. Since the beginning of the year, its trading volume has jumped to $2.4 billion. However, despite this sharp rise in trading volume, there are signs that the platform is illiquid by less than $300 million in open interest.
According to analysts at Kaiko, the figure implies that the predictive value of the US election is low. The illiquid market also means that there is a chance of high slippage when trades are not well executed.
There is a recent example where a trader deposited $3 million on the platform and put it all on Trump to win. With this move, he cleared the entire order book and bought lots of ‘YES’ shares in favor of Trump at 99.7% odds. After his purchase, the odds slipped a little, falling to 66%.
Many players say the odds dropping after large trades shows that it is susceptible to manipulation, with some calling it a sham. Other players said it is because there are no other markets on the platform, and the trades were not properly executed.
Presto Labs analysts have cited a possibility that market manipulation could be at play but said it was unlikely because of its lack of financial upside. Meanwhile, Coplan believes that the market is still in its early days and expects it will become more accessible.