Polymarket announces the launch of its own L2, is Polygon’s ace gone?

Unique Title: The Economic Calculations Behind Polymarket’s Departure from Polygon

Unique Writer: Azuma, Odaily Planet Each day

On December 22, a dynamic concerning the main prediction market Polymarket attracted widespread consideration in the market—Mustafa, a member of the Polymarket crew, confirmed in the Discord group that Polymarket plans emigrate from Polygon and launch an Ethereum Layer 2 community referred to as POLY, which is presently the challenge’s high precedence.

An Unanticipated “Breakup”

Polymarket’s selection to go away Polygon is not stunning; one is a scorching utility layer consultant, whereas the different is a steadily declining previous layer, and there is a mismatch in market warmth and worth expectations between the two. As Polymarket steadily grows into a brand new large, Polygon’s unstable community efficiency (the newest failure occurred on December 18) and comparatively weak ecosystem have objectively restricted the former.

For Polymarket, constructing its own portal means a win-win selection in each product and financial dimensions.

In phrases of product, along with looking for a extra secure working atmosphere, constructing its own Layer 2 community permits Polymarket to customise underlying options primarily based on its platform wants, thereby adapting extra flexibly to future upgrades and iterations of the platform.

The extra important which means lies in the financial facet. Constructing its own community means Polymarket can consolidate the financial actions and surrounding companies derived from its platform into its own system, stopping associated worth from spilling over to exterior networks and as a substitute steadily solidifying as its own systemic benefit.

Express and Implicit Financial Contributions

As an utility layer, Polymarket’s explosive progress has introduced goal direct financial contributions to Polygon. Information compiled by analyst sprint on Dune reveals:

• Polymarket’s energetic customers this month are 419,309, with a historic whole of 1,766,193 customers;
• The whole quantity of transactions this month is 19.63 million, with a historic whole of 115 million transactions;
• The whole transaction quantity this month is $1.538 billion, with a historic whole transaction quantity of $14.3 billion.

As for the way to assess Polymarket’s contribution to the financial ecosystem of Polygon, Odaily Planet Each day discovered a slightly coincidental ratio whereas compiling information from each.

• First, in phrases of locked funds, Defillama information reveals that the whole worth of positions throughout the Polymarket platform is roughly $326 million, accounting for a couple of quarter of Polygon’s whole locked worth of $1.19 billion;
• Second, concerning fuel consumption, Coin Metrics reported final October that transactions associated to Polymarket had been estimated to eat 25% of the fuel on the total Polygon community;
• Contemplating that this information is considerably dated, we checked current adjustments, and information analyst petertherock on Dune confirmed that transactions associated to Polymarket consumed roughly $216,000 in fuel in November, whereas Token Terminal reported that the whole fuel consumption on the Polygon community that month was about $939,000, with an identical proportion near 1 / 4 (round 23%).

Whereas there could also be coincidences attributable to statistical standards and time home windows, the cross-dimensional related outcomes can even function a reference for estimating Polymarket’s financial significance to Polygon.

Along with quantifiable indicators reminiscent of energetic customers, locked funds, transaction quantity, and fuel contributions, Polymarket’s financial significance to Polygon is additionally mirrored in a sequence of extra difficult-to-measure but equally actual implicit contributions.

First is the activation of stablecoin liquidity. All transactions on Polymarket are settled in USDC, and its high-frequency, steady buying and selling conduct has objectively considerably elevated the demand for circulation and use circumstances of USDC on the Polygon community; second is the ancillary behavioral worth of retained customers. Past the prediction market itself, these customers may additionally flip to make use of different merchandise in the Polygon ecosystem, reminiscent of DeFi, for comfort, thereby enhancing the general ecological worth of the Polygon community. These contributions are troublesome to quantify with particular information however represent the “actual demand” that underlying networks worth most and is additionally the most scarce.

Why Now? The Reply is Not Laborious to Guess

The truth is, simply from the perspective of consumer scale, information efficiency, and market quantity, Polymarket has absolutely established the confidence to face on its own. This is now not a query of “whether or not to go away,” however slightly “when to go away.”

The selection to start migration at this second is primarily attributable to the impending Polymarket TGE. On one hand, as soon as Polymarket completes its token issuance, its governance construction, incentive system, and financial mannequin will turn out to be comparatively fastened, and the value and complexity of subsequent underlying migration will considerably improve; on the different hand, upgrading from a “single utility” to a “full-stack system of utility + underlying” inherently means a change in valuation logic, and constructing its own Layer 2 undoubtedly opens up the next ceiling for Polymarket in phrases of narrative and capital.

In abstract, Polymarket’s departure from Polygon is basically not only a easy underlying migration however a mirrored image of structural adjustments in the crypto trade. When high functions start to own the potential to independently carry customers, site visitors, and financial actions, if the underlying community can not present extra worth, it is going to inevitably be “backstabbed.”

Nothing greater than the pursuit of revenue.

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