Polymarket Reportedly Seeks $50M in Funding, Mulls Token as Election Bets Surge

The article mentions that the startup headquartered in New York might launch its own token. If the startup decides to do so, investors involved in a future funding round would be given warrants allowing them to purchase these tokens, as reported by The Information.

According to the article, Polymarket intends to let users authenticate the results of real-world occurrences by employing their potential token.

It wasn’t immediately apparent if this new development would serve as an addition, substitute, or replacement for UMA Protocol, the oracle service Polymarket relies on to settle markets and resolve disputes through community voting. The news didn’t refer to UMA explicitly, but its token experienced a slight increase in value following the publication of the article.

At the heart of Polymarket lies a flexibility towards various oracles, according to their official documentation.

Neither Polymarket nor UMA responded immediately to CoinDesk’s request for comment.

Breakout year

In May, Polymarket announced they successfully secured a total of $70 million in funding across two rounds. The first round was a $25 million investment, while the second, a Series B round, was headed by billionaire Peter Thiel’s firm, Founders Fund, to the tune of $45 million.

The Information’s article didn’t make clear if investors in the potential $50 million funding round would get shares (equity) or only token options (warrants). Furthermore, it didn’t provide any details about Polymarket’s current valuation, as this information remains undisclosed.

One successful tale of innovation this year is Polymarket. It has gained recognition not just within the niche area of prediction markets, but also in the broader cryptocurrency scene. The transactions on this platform are automated through smart contracts on the Polygon blockchain and settled using USDC, a coin that holds an equivalent value to U.S. dollars.

In August, trading volume on the Polymarket platform reached an unprecedented peak of $472 million, and it’s looking like this month could be the second-highest, with a current total of $397 million in trades as per Dune Analytics data up until Monday.

Participants can utilize Polymarket for wagering on a wide variety of topics ranging from football games to geopolitical issues in the Middle East; however, it’s the U.S. presidential election that garners the most interest, with bettors collectively wagering close to $1 billion on its outcome.

Regulatory restrictions

In compliance with a regulatory agreement, Polymarket restricts access for users who appear to be based in the United States. However, some clever American traders are said to have circumvented this geographic restriction by utilizing Virtual Private Networks (VPNs).

This year, the success of the startup has been causing discomfort for Kalshi, a regulated prediction market using US dollars, as it’s been locked in an extended legal dispute with the U.S. Commodity Futures Trading Commission (CFTC). The CFTC is considering a proposed rule that might prohibit contracts on political election events across all exchanges they oversee, shifting regulation of such activities to individual states.

Last week, the Chairperson of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, mentioned his focus on overseas betting platforms operating in elections, which offer access to American customers.

Should any entity, whether it’s Polymarket or another one, act illegally, we will exercise our power to enforce civil law to halt such actions,” said Behnam when asked about this matter at a gathering in Washington. According to Bloomberg, this was his response.