As the U.S. presidential election hangs in the balance, prediction markets have made interesting fodder for conversation.
As previously reported by BeInCrypto, Ethereum-based prediction markets such as Catnip and Polymarket are playing a role in the 2020 election. For instance, volume on Polymarket went from zero to nearly $3 million in just a few weeks leading up to the election.
There’s also trading platform FTX, which launched a futures market at the beginning of the year so people could bet on the U.S. election. On FTX, users can buy TRUMPWIN and TRUMPLOSE, ERC20 tokens that will be redeemable on the exchange for either $1 or $0 depending on the outcome of the election.
Such markets illustrate the likelihood of an outcome in binary events based on the crowd’s economic bets. As votes continue to be counted, TRUMPWIN tokens have taken a notable hit in recent hours.
The future contracts for a Trump victory dropped sharply on Wednesday — to a low of around $0.19 after fluctuating close to $0.70 for most of the preceding 24 hours. This drop is reflective of lower confidence in the republican incumbent winning a second term.
Initially, online betting markets were more bullish on a Trump victory than regular polls, but the latest price action is a clear reversal of that sentiment.
It’s possible that these crypto-based prediction markets are belatedly catching up to national and battleground state polls. According to some, the discrepancy between the polls and the current vote tally can be explained by mail-in voting.
As the theory goes, remaining absentee ballots could potentially favor Democrat Joe Biden, giving him better odds of an electoral victory. The change in TRUMPWIN could simply be this delayed realization playing out in the market.
However, the winner of the election is still unknown; and there’s still time for things to change. As for the markets themselves, blockchain-based betting markets may increasingly be used to understand outcomes in the future.