Vitalik Buterin has backed Polymarket, and his support comes at a time when prediction markets have come under regulatory scrutiny. The Ethereum co-founder calls them “social epistemic tools,” citing interest from economists and policy intellectuals alike.
Polymarket has seen growing interest in recent times, resulting in the number of active traders and monthly trading volumes growing by leaps and bounds.
Vitalik Buterin Protects Polymarket From CFTC Probes
Buterin acknowledges the role of the decentralized prediction market platform in providing the public with an overview of important events. He also emphasized Polymarket’s role in reflecting events that are likely to happen.
“Categorizing Polymarket as ‘gambling’ is a serious misunderstanding of what prediction markets are and why people (including economists and policy intellectuals) are so excited about them,” Buterin wrote.
The statement came after the U.S. Commodity and Futures Trading Commission (CFTC) proposed to restrict prediction markets like Polymarket in May. The regulator argues that such markets are contrary to the public interest, citing the risks associated with election-related gambling. U.S. Sen. Elizabeth Warren shareG this sentiment and signed a proposal to ban prediction markets related to the US elections.
Read more: Cryptocurrency Regulation: What Are the Advantages and Disadvantages?
Other crypto giants besides Buterin also criticized the CFTC’s claims. For example, Gemini challenged the rules, arguing that they distort the intent of the Commodity Exchange Act (CEA) and are contrary to the public interest. Cameron Winklevoss, co-founder of Gemini, emphasized that decentralized prediction markets provide valuable forecasts of future events, praising their genuine public utility.
“Decentralized prediction markets are a significant innovation with real social utility. They provide valuable information about future events based on financial statements. Unlike surveys, expert opinions, or pundits, they require participants to back up their words with actions — to have skin in the game. This proof-of-stake requirement gives them integrity that other sources of information cannot claim,” Winklevoss said.
Coinbase similarly opposed the proposal, with the exchange’s chief legal officer Paul Grewal highlighting concerns about the ambiguous definition of “gaming.”
On the other hand, Opinion Labs sheds light on why prediction market Polymarket may be mistakenly categorized as a gaming platform. The firm points out that Polymarket is not “fully decentralized or permissionless,” noting that several projects that use the term “prediction market” essentially operate as casinos.
Polymarket Records is rapidly growing in popularity Amid the election hype in the US
Despite the CFTC’s scrutiny, which could become a hindrance and bring decentralized prediction markets under control, Polymarket continues to see increased activity, driven in part by the excitement surrounding the US election and the ongoing campaigns.
Bettors are placing bets on various possible outcomes in the presidential race, where Donald Trump and Kamala Harris are currently tied at 50% each. In the Senate projections, Republicans hold a strong lead with 71%, compared to 29% for Democrats.
Amid this surge in activity, Dune Analytics reports that Polymarket’s monthly trading volume surpassed $390 million in August, up from $387 million in July. The platform also hit a record number of monthly active traders, reaching 53,981 users, up from 44,523 the previous month.
Daily volume and trader activity indicators show steady growth, driven largely by election-related interest
Read more: How can blockchain be used for voting in 2024?
This momentum has led Polymarket to partner with AI firm Perplexity, which has improved the user experience with advanced news summarization features. However, concerns remain about the platform’s ability to accurately reflect market sentiment.
