The 2024 US elections were not just a pivotal moment in American politics—they also became a defining catalyzer for Polymarket, the most successful blockchain-based prediction market. In the lead-up to November 5th, Polymarket experienced an unprecedented surge in activity, with its main election market and numerous secondary markets fueling a meteoric rise in user engagement and trading volumes. Some anticipated a steep and definitive decline following the resolution of these election-related markets, reminiscent of the collapse Augur experienced after its own peak in 2021.

Polymarket's trajectory, however, tells a more nuanced story.

Metrics at Their Peak and the Aftermath

At the height of the election frenzy, Polymarket achieved remarkable metrics:

• Daily Active Wallets (DAW): Climaxed at 50,000 users.

• Daily Transactions: Peaked at over 500,000.

• Daily Volume: Reached a staggering $350 million on November 6th.

• Cumulative Open Interest: Surpassed $720 million.

Following the resolution of the US election markets, these numbers predictably fell. After one month and at approximately 30,000, DAW almost halved from its all-time-high, but managed to maintain similar levels of activity as the weeks just preceding the election day.

Similarly, transactions dropped to around 200,000 per day, matching activity levels of October. Daily volume stabilized at about $40 million, again the same levels of October. Open interest took the hardest hit, falling 7x to $100 million but showing signs of a gradual rebound, and one month after resolution it’s already back to almost $250 million.

Despite the drop-off in activity, Polymarket has retained a resilient core of users. The data reveals several key insights.

Retention Beyond the Elections: Many users initially drawn by the US election markets likely transitioned to other prediction categories, such as the Federal Reserve’s interest rate decisions, geopolitical conflicts, cryptocurrency price movements, and above all sports events. This retention speaks to Polymarket’s ability to engage users beyond a single, marquee event. Interestingly, the average bet size has been picking up again after a sharp drop.

Diversity: Despite the dominance of election-related markets during the peak, currently almost 30% of the daily unique wallets has never placed any bet related to that event.

Since the end of the US election, the total number of daily unique wallets (blue) has remained relatively stable, suggesting that the influx of new users is limited, or is offset by existing users who became inactive. At the same time, the number of daily wallets that never engaged with US election markets (red) has been increasing significantly since the end of October, after remaining low during the campaign’s climax in the summer 2024. Correspondingly, the ratio of non-election market participants (yellow) has also risen to about 25%, showing that the relative importance of non-election-related activity is growing compared to election-focused markets. Overall, the number of unique daily wallets that never engaged with US-related markets has increased dramatically during the past year and currently represent about a quarter of all users.

This suggests that the US election markets acted as a catalyst, drawing attention to Polymarket and attracting new users. These new cohorts likely joined the platform after the resolution of the election markets and began engaging with other markets. Meanwhile, users primarily focused on election markets likely reduced their participation. As a result, the total user base remained stable, but there was a noticeable shift in user composition and activity, leading to a significant increase in the ratio of non-election-focused users.

Challenges: With two unresolved election-related markets accounting for almost $100 million of open interest, another big drop is expected when these markets close in January. Until another high-profile event captures global attention, sports markets are likely to dominate the platform’s activity.

The Role of US Elections as a Catalyst

The US elections clearly served as a strong gateway, bringing prediction markets to a wider audience. However, Polymarket has demonstrated its capacity to turn this spike in interest around a single issue into ongoing user engagement. This success could be attributed to Polymarket's ability to strike a balance between speculation (betting) and utility (information).

This unique blend has allowed the platform to create a durable, sustainable product that continues to attract and retain users, as reflected by the growing popularity of its app compared to other major media outlets:

A Sustainable Future?

Polymarket’s post-election resilience illustrates the platform’s maturation and adaptability. Unlike Augur, whose activity cratered after its peak, Polymarket has retained a significant portion of its user base and volume. This resilience points to a sustainable ecosystem that thrives on a blend of speculation, information discovery, and diverse market offerings.

As Polymarket looks to the future, its challenge will be to maintain momentum in the absence of singular, high-stakes events like the US elections. The coming months will test whether the platform can attract users with other types of markets, continuing to bridge the gap between entertainment and information. While I anticipate a second surge of new users and activity during the next election cycle, four years is a significant timespan—especially in crypto. During this period, numerous new apps are likely to emerge, potentially replacing Polymarket as it once did with Augur and other early prediction market platforms.

Extra: The Comparison with Augur

Augur’s story, when examined more closely, also reveals a more nuanced and interesting narrative than it might initially seem.

First, it's important to understand the differences in timeline and the structure of its election markets compared to Polymarket. While Polymarket had one major US election market that resolved almost immediately after the vote in November 2020 and experienced a sharp drop in value shortly thereafter, Augur's timeline was more eventful. Augur, and its main interface Catnip, had three major election-related markets, each with different resolution dates:

1. The first market, "Will Donald Trump win the 2020 elections?", expired on January 8, 2021, and was resolved without disputes by January 10, 2021.

2. Another market, "Who will win the 2020 election?", expired on December 20th but was only resolved on January 14, 2021 due to a long dispute, and saw around $250k in volume and $160k in open interest.

3. The largest Trump-related market, again "Will Donald Trump win the 2020 elections?" with about $12 million in open interest, expired on January 22, 2021, but it was only settled after a dispute period on February 11, 2021.

The delays in market resolution were partly due to the immature dispute resolution mechanisms adopted by Augur, and partly due to the legal challenges mounted by Trump against the election results.

Another important detail is how the total value locked is measured. While Augur's TVL in USD saw a sudden drop from a peak of $13 million to $3 million—more than a 4x decline—the picture changes when measured in ETH. The outflow of TVL started earlier and occurred more gradually than it did when viewed in USD. More importantly, Augur’s TVL in ETH plummeted from 19,000 ETH to just 700 ETH, a catastrophic 20x decrease that far surpassed Polymarket’s 7x drop in TVL. This difference is primarily due to the rapid rise in the price of ETH during those weeks.