Polymarket’s Liquidity Gambit: Tapping Market Makers to Fuel Prediction Platform Surge
Polymarket is making a power play for deeper liquidity. The prediction market platform appears to be enlisting professional market makers—a strategic pivot that could transform its trading depth and user experience overnight.
The Liquidity Engine
Think of market makers as the high-frequency pit crew of digital finance. They don't just provide quotes; they become the buy and sell pressure, narrowing spreads and absorbing large orders that would otherwise cause wild price swings. For a platform built on the premise of betting on real-world events, this isn't a nice-to-have—it's the oxygen supply.
Why This Move Matters Now
Prediction markets live and die by their ability to execute trades instantly at fair prices. Slippage and wide spreads kill engagement. By potentially bringing in institutional-grade liquidity partners, Polymarket isn't just tweaking its engine; it's installing a turbocharger aimed at attracting more capital and more nuanced bets on everything from elections to macroeconomic trends.
The Cynical Take
Let's be real—this is finance's oldest playbook: when organic growth stalls, rent some liquidity until it looks real. It's the startup equivalent of hiring actors for your launch party. But if it works, the line between fabricated and genuine activity blurs into pure profit.
The gamble is clear. Succeed, and Polymarket cements itself as the go-to venue for speculative intelligence. Fail, and it's just another platform trying to buy its way into relevance. Watch the order books—they'll tell the real story.
Polymarket whales retain outsized influence
While Polymarket is growing, there are concerns that the presence of whales may skew the predictions, which are now depending on retail and the knowledge of the general social media user.
Polymarket explorers also discovered accounts with connections to the wallets of Wintermute. The platform has grown enough to the point of specialization, as traders seek arbitrage, niche expert knowledge, and ways to be the first to know the real odds.
Crypto market maker Jump Trading joined Kalshi in the past few months, opening the door to the assistance of market makers.
According to Bloomberg, Polymarket has reached out to traders, including those with professional sports betting track record, about joining the in-house trading team, based on unnamed sources familiar with the matter.
Market makers challenge Polymarket’s neutrality
During its rise to fame in 2024, Polymarket was presented as an engine for truth discovery, based on distributed trader opinions. However, Kalshi has taken a different approach, applying an in-house team that often trades against users.
This approach may copy the usual sportsbook betting, where the platform sets the odds and benefits from customers’ losses. A market maker, however, may serve to take up less popular positions, ensuring specific markets are kept liquid.
The in-house team was mentioned just as Polymarket prepares to launch on the US market, by starting a closed beta on its iOS app. The app is already gaining popularity and promising mainstream adoption. The platform carried over $286M in open interest, growing vertically in the past two months.
Polymarket is yet to pass its open interest record from late 2024, but is on track for rapid growth.
Polymarket has already become one of the key venues for trading, recently expanding its volumes to pass Solana’s meme token trenches. Predictions are also gaining influence ahead of perpetual futures markets, offering more simplicity and no technical or trading knowledge.
Polymarket also turned more attractive as it lacked the rapid liquidations and losses of other crypto markets. In November, Polymarket reached a record with over 494K active traders.
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