Polymarket founder defends platform’s integrity amid election betting surge

Polymarket founder Shaye Coplan has described the prediction platform as strictly non-partisan. Coplan’s post on X is in response to a recent piece by the New York Times about the Polygon-based platform.

The NYT article spotlighted Polymarket, highlighting its 64% odds of Trump winning the election and how the platform has enjoyed the support of Elon Musk. However, Coplan noted that Polymarket is not a political website even though the US elections have increased its popularity. The goal remains to “harness the power of free markets to demystify the real world events that matter most to you,” he said.

According to Coplan, Polymarket is more of a “reality check”  in a world where algorithms only reinforce established opinions to keep users engaged. Thus, it only provides unbiased data that reflects the true market position.

He said:

“We’re just market nerds who think prediction markets provide the public with a much-needed alternative data source.”

Coplan acknowledged that the US elections have contributed significantly to Polymarket’s popularity, adding that the platform takes that responsibility seriously. While it has been around for some years, Polymarket’s popularity shot up in the lead-up to the presidential elections after it correctly predicted President Biden would drop out of the race.

Despite all the hype around Polymarket, many believe its prediction does not reflect public opinion on the US elections. Crypto founder Angela Steffens disagrees that the Polymarket is a reality check, noting that the bet does not translate to votes since bettors are not in the US. However, she agreed that it could be an alternative source of information.

Polymarket denies external influences and market manipulation 

Coplan also denied speculations about external influences affecting how the platform operates. According to him, venture capital billionaire Peter Thiel does not have control over the company. He added that while Peter Thiel’s VC, Founders Fund is a minority investor in the company, this does not impact how  Polymarket works since the platform is fully transparent.

He said:

“The beauty of Polymarket is it’s all peer-to-peer and transparent. Even more transparent than traditional finance, where all the data is obfuscated and only visible to the operator.”

Coplan went further to explain how the platform works, noting that the market sets the price, and anyone who disagrees with the odds can easily capitalize on that by buying into the side they believe is priced low.

Meanwhile, Polymarket itself had earlier debunked speculations of market manipulation, which surfaced after investigations showed that four accounts tied to one person swayed the odds significantly in favor of Trump. Polymarket identified the trader who placed over $26 million on Trump as a French resident who placed the bets based on personal views.

Polymarket illiquid despite large trading volume 

With Polymarket enjoying mainstream attention, the platform has seen its trading volume increase significantly, with almost $2.4 billion since January. However, despite this volume, there are signs that it is highly illiquid, as evident in open interest being less than $300 million.

Kaiko analysts note that the low level of open interest means that Polymarket’s predictive value for the US election is low.

The illiquid market also means a high chance of slippage when large trades are poorly executed. In a recent case, a trader, GCorttell93, sent $3 million to the platform and bet everything on Trump winning. This caused him to clear the entire order book, and he bought almost $300,000 worth of Trump “YES” shares at 99.7% odds before the odds returned to 66%.

Many have cited odds skewing due to large trades as proof that the platform is a sham and susceptible to manipulation.

Another group claims this happens because there are no market makers on the platform, and the trade was poorly executed. Analysts at the financial services firm Presto Labs acknowledged the theoretical possibility of market manipulation but believed it was unlikely as it had minimal financial upside.

Meanwhile, Coplan believes these are still early days and expects the predictive market to become more accessible. “We foresee a world where markets guide decision-making and opinions are backed by capital. The downstream effect is an information landscape with less sensationalism and more truth,” he said.