Comparison of Polymarket and Predictfun: features, earning strategies and development prospects
In brief: Polymarket is the largest prediction market on Polygon, over $1 billion in volume in 2024. Predictfun is a native Bitcoin market. Both require a crypto wallet and analytical thinking. Profitability depends on the accuracy of the forecasts, and not on the BTC price.
In the modern crypto space, prediction markets are turning into one of the most dynamic niches with growing interest from traders. Polymarket and Predictfun are two leading platforms offering unique features for betting on the outcomes of real events. Each of these platforms has its own characteristics, advantages and risks, which are critical to understand before you start trading.
The growth of prediction markets as a new trend in the crypto space
The last 12 months have been marked by a noticeable increase in trading volumes in prediction markets. Particularly noteworthy is the period of relative stagnation of the main cryptocurrency market, when part of the capital flows into alternative instruments with high event-related volatility.
This phenomenon is explained by several factors. First, prediction markets create a “dopamine loop,” a quick-reward mechanism for making decisions that is especially attractive during times of low volatility in major cryptocurrencies. Secondly, there is a redistribution of capital - traders are looking for alternative ways to generate profitability.
As representatives of the largest fintech platforms note, prediction markets have the potential to become an independent class of products for retail users.
What are prediction markets and how do they work
Decentralized prediction markets are platforms that allow users to bet on the outcomes of real-life events. The key difference from traditional bookmakers is that the contract price directly reflects the perceived probability of an event.
The mechanism of work can be explained using the example of the presidential elections in the United States. If the price of the Trump Wins contract is $0.42, this means that the market estimates the probability of such an outcome to be 42%. The user can buy this contract if he believes that the real probability is higher, or sell it if he estimates the chances to be lower.
To verify the results, oracles are used - systems that transfer data from the real world to the blockchain. After the event occurs and the result is confirmed, smart contracts automatically distribute funds among the winning participants.
- Buying a contract = betting that an event will happen
- Selling a contract = betting that an event will not happen
- Contract price = the market’s current assessment of the likelihood of an event
- Payment occurs automatically through smart contracts
Polymarket: in-depth analysis of the industry leader
Launched in 2020, Polymarket has quickly become a leader among decentralized prediction markets. The platform is built on the Polygon blockchain, which ensures high transaction speeds with moderate fees. Polymarket's main focus is political events, cryptocurrency forecasts and macroeconomic indicators.Polymarket's commission structure is around 0.05% of trade volume, which is lower than traditional bookmakers but higher than some competitors. The platform uses USDC as the main currency for settlements, providing trading stability without the volatility associated with native tokens.
It is important to note that in 2022, the US Commodity Futures Trading Commission (CFTC) initiated an investigation into Polymarket, which resulted in a $1.4 million fine and a requirement to close some markets to US users.
- Advantages:High liquidity, variety of markets, clear interface
- Disadvantages: Regulatory risks, moderately high commissions, cases of controversial market activity
Technological infrastructure and security Polymarket
Polymarket is built on Polygon, a layer 2 solution for Ethereum that provides high throughput and lower transaction costs. This architecture achieves a balance between security (via communication with the Ethereum mainnet) and scalability.
To verify the results of events, Polymarket uses the UMA (Universal Market Access) protocol, which relies on economic incentives to reliably determine outcomes. The system requires a deposit from verifiers, which reduces the risk of manipulation.
If controversial situations arise, an appeal mechanism is provided, where holders of UMA tokens can participate in voting to determine the correct result. This system provides reliability, but may slow down payments for some events.
Liquidity and variety of markets on Polymarket
Polymarket is characterized by high liquidity in major markets, especially those related to political events. For example, markets surrounding the US presidential election regularly see high volumes with low spreads.
The distribution of liquidity by market category is as follows:
| Market type | Average trading volume per day | Typical spread |
|---|---|---|
| Political events | $5-15 million | 0.2-0.5% |
| Cryptocurrency forecasts | $1-3 million | 0.5-1.2% |
| Macroeconomic indicators | $0.5-2 million | 0.8-1.5% |
| Niche events | $50-200 thousand | 2-5% |
High liquidity of the main markets allows you to enter into large transactions with minimal slippage, which is especially important for professional traders and hedge funds.
Scandals and controversies around Polymarket
During its existence, Polymarket has encountered several notable incidents. The most frequently discussed topic is the information advantage of individual participants over the mass market during sudden news movements.
In addition, in 2022, the CFTC imposed a fine of $1.4 million on the platform for operating without an appropriate license and demanded that American users limit access to certain markets.
Predictfun: innovations and unique advantages
Predictfun is a relatively new platform, launched in 2022 and quickly gaining popularity thanks to its innovative approach. The main technological difference is the use of the BNB Chain blockchain, which provides lower commissions (about 0.02% of the transaction volume) and high transaction speed.
A key event in the development of the platform was the acquisition of the competing project Probable in early 2023, which significantly expanded the user base and strengthened its position in the BNB Chain ecosystem.
Predictfun's main innovation is integration with Venus Protocol, which allows bets to simultaneously generate passive income. This feature fundamentally changes the economics of participation in prediction markets.
- Advantages: Passive income mechanism, low commissions, strategic focus on the Asian market
- Disadvantages: Less liquidity compared to Polymarket, less diverse markets, relative newness
Integration with DeFi and passive income mechanism
Predictfun's unique feature is its integration with Venus Protocol, the leading lending and borrowing protocol on BNB Chain. Unlike traditional prediction markets, where funds are simply locked until the event is resolved, Predictfun places these funds on the Venus Protocol, generating returns.
The mechanism works as follows: when a user places a bet, his USDT tokens are sent to Venus liquidity, where they bring 3-5% per annum. This income is distributed among participants in proportion to their bets, regardless of the outcome of the event. Thus, even if the bet loses, the user receives part of the passive income.
This model allows us to soften the expectation of loss in a zero-sum game, especially for long-term markets where funds may be locked up for months.
Focus on the Asian market and localized content
Predictfun is strategically targeting the Asian market in several ways. Firstly, the platform offers full localization into Chinese, Korean and Japanese, with an emphasis on the cultural characteristics of each region.
Secondly, Predictfun creates specialized markets for events that are of particular importance in Asia: regional elections, Asian cryptocurrency projects, sporting events popular in the region (for example, Dota 2 and League of Legends tournaments).
- Markets related to Chinese economic policy
- Forecasts for Asian altcoins
- Results of regional e-sports tournaments
- Development of technology projects of Asian origin
This verticalization strategy allows Predictfun to occupy a niche that is not sufficiently covered by Western competitors and build a more loyal community.
User migration and tokenomics after the acquisition of Probable
The acquisition of Probable by Predictfun was a significant event in the BNB Chain ecosystem. User migration was implemented through a well-thought-out mechanism for converting points and assets: Probable users were offered bonuses when switching to Predictfun, including additional income in the first months.
To integrate ecosystems, a special “bridge” was created, which made it possible to transfer unfinished markets while maintaining all conditions. According to the official Predictfun blog, more than 85% of Probable's active users have successfully migrated.
Direct comparison of platforms by key parameters
To make an informed decision, it is necessary to directly compare the key parameters of both platforms:
| Parameter | Polymarket | Predictfun |
|---|---|---|
| Blockchain | Polygon | BNB Chain |
| Commissions | ~0.05% + network commissions | ~0.02% + commissions networks |
| Liquidity | High, especially for political markets | Average, growing |
| Diversity of markets | Wide (politics, crypto, economics, sports) | Average with a focus on Asian events |
| KYC/verification | Restrictions by individual jurisdictions | As a rule, basic access without KYC |
| Unique features | High liquidity, integration with UMA | Passive income through Venus Protocol |
| Regulatory risks | Increased | Average |
| Average trading volumes | $20-30 million per day | $5-10 million per day |
| Mobile application | Limited functionality | Yes (iOS/Android) |
Each platform has its own strengths: Polymarket leads in liquidity and market diversity, while Predictfun offers lower fees and a unique passive income mechanism, which is especially valuable for long-term markets.
Technical background and infrastructure of both platforms
The technology decisions underlying the platforms directly impact the user experience and functionality.
Polymarket uses Polygon, a layer 2 solution for Ethereum that provides significant reductions in transaction costs while maintaining a high level of security through periodic synchronization with the main network. The average transaction cost on Polygon is $0.01-0.05, and confirmation time is 2-3 seconds.
Predictfun operates on BNB Chain, which has even lower fees ($0.005-0.02 per transaction) and high speed (1-2 seconds). However, BNB Chain has a more centralized validator structure, which could theoretically reduce censorship resistance.
As for the oracle system, Polymarket relies on the UMA protocol with economic incentives for reliable verification, while Predictfun uses a combination of Chainlink oracles and its own DAO voting in disputed cases. Both approaches have their advantages: UMA is more decentralized, but Predictfun's system can be faster in simple cases.
Strategies for making money and minimizing risks in prediction markets
Successful trading in prediction markets requires special strategies that differ from traditional trading. Let's look at the most effective approaches:
- Information advantage - searching for markets where you have specialized knowledge or access to data before the bulk of participants
- Trading on news - using the time lag between the appearance of news and its full reflection in the price
- Arbitrage between platforms - exploiting price differences for the same events
- Hedging real risks - using prediction markets as insurance
- Long-term positioning - searching for markets with distorted probability estimates
The key to success is identifying cases where the market's estimate of the probability of an event (the contract price) differs from your estimate based on in-depth analysis. It is also important to consider the factor of commissions and liquidity, which can significantly affect the final profitability.
Risk management is as important as your entry strategy. Experienced traders recommend not risking more than 2-5% of your portfolio on one market and diversifying your bets across different types of events and time horizons.
Trading on news: using time lag and information advantage
One of the most effective strategies is news trading, based on the time delay between the publication of information and its full reflection in contract prices. This lag is especially noticeable during unexpected events or the publication of specialized data.
For example, when breaking corporate and macroeconomic news, quotes in prediction markets may react with a delay of minutes. Traders who react first to news sometimes gain an advantage before the market completely reassesses the probability of the outcome.
The key sources for such a strategy are official communication channels of companies and regulators, specialized information services and accounts of key market participants. It is important to remember ethical boundaries - using non-public insider information may lead to account blocking.
Arbitration between platforms and minimizing risks
Arbitrage between platforms allows you to receive virtually risk-free profits due to price discrepancies for identical events. For example, a contract “Trump will win the 2024 election” might trade at $0.42 on Polymarket and $0.45 on Predictfun, creating an arbitrage opportunity.
Typical spreads between platforms:
| Market type | Average spread Polymarket/Predictfun | Potential profit |
|---|---|---|
| Political events | 0.5-2% | Average |
| Cryptocurrency forecasts | 1-3% | High |
| Sporting events | 0.3-1% | Low |
When implementing arbitrage strategies, it is critical to consider the fees of both platforms, the time the funds are locked, and the risk of changing market conditions. The ideal arbitrage opportunity should cover all fees and leave some room for unforeseen changes.
Hedging real risks through prediction markets
Prediction markets can be used not only for speculation, but also for hedging real business and financial risks. This approach is particularly effective when traditional hedging instruments are unavailable or too expensive.
Example: A cryptocurrency business owner concerned about potential increased regulation could hedge this risk by betting on relevant political events. If regulatory changes do occur and negatively impact the business, the winnings from the bet will partially offset the losses.
For effective hedging, it is necessary to determine the correlation between the risk being hedged and an event available on the platform, and also calculate the optimal position size. The hedging ratio (bet size) must be proportional to the potential damage to the business if an adverse event occurs.
Risks and the dark side of prediction markets
With all the possibilities of prediction markets, there are significant risks to be aware of. First of all, this is a zero-sum game - minus platform commissions, the profit of some participants is equal to the losses of others.
Other key risks include:
- Market manipulation - the practice of wash trading (artificial creation of volumes) and deliberate distortion of prices
- Insider trading - the use of non-public information to gain an unfair advantage
- Errors in market conditions - ambiguous wording that can lead to disputes
- Regulatory risks - potential restrictions or fines from financial regulators
The CFTC case against Polymarket showed that regulators are actively interested in this area and can take action against platforms operating without the appropriate licenses. Users should be aware that the regulatory landscape continues to evolve.
The future of prediction markets: trends and development prospects
Analysis of current trends allows us to identify several key directions for the development of prediction markets in the next 2-3 years:
- Regulatory separation - the formation of two segments: regulated platforms with KYC and licenses, and more decentralized solutions with limited functionality
- Institutionalization - the arrival of traditional financial players and an increase in the average size of transactions
- Integration with DeFi 2.0 - the development of passive income systems started by Predictfun
- Specialization markets - transition from general platforms to niche solutions for specific industries
- Implementation of AI - use of machine learning for pricing and risk management
For Polymarket, the immediate future is likely to involve finding ways to comply with regulatory requirements without losing its existing audience. There are signs that the platform is moving towards obtaining the necessary licenses in some jurisdictions.
Predictfun, in turn, will continue to develop integration with the DeFi ecosystem and strengthen its position in the Asian market. Recent partnerships with regional media and web3 platforms indicate consistent implementation of this strategy.
Conclusion: which platform to choose and why
The choice between Polymarket and Predictfun should be based on your specific goals, preferences and trading strategies. Each platform has its own advantages for certain types of users.
| User type | Recommended platform | Reasons |
|---|---|---|
| Active trader of political events | Polymarket | High liquidity, variety of markets |
| Long-term investor | Predictfun | Passive income, low commissions |
| Asia Trader | Predictfun | Localized content, focus on regional events |
| Arbitrage Trader | Both platforms | Must use price discrepancies |
| Beginner user | Polymarket | Clearer interface, more educational materials |
In our opinion, for the majority of active traders, Polymarket offers a more balanced set of opportunities with an emphasis on liquidity and market diversity. However, for long-term positions and Asian users, Predictfun may be a better option due to its passive income mechanism and lower fees.
The optimal strategy for serious participants is to use both platforms with the allocation of funds depending on the types of markets and trading time horizon.
Frequently asked questions about prediction markets
How to start trading on Polymarket?
Connect your wallet (MetaMask) to the Polygon network, top up USDC, select a market and buy a Yes or No position. The minimum amount is $1.
Is it possible to make money on prediction markets without experience?
Theoretically, yes, but professional traders (market makers) have an information advantage. Start with small amounts and events that you understand well.
Are there risks of losing the entire deposit?
Yes - each position can be reset to zero if the forecast is incorrect. Never invest more than you are willing to lose completely.