Polymarket is expanding its operations by recruiting an in-house team of traders and market makers, signaling preparations for the anticipated growth of prediction markets. This strategic move aims to enhance liquidity on the platform, which has recently experienced a record month of activity.
The prediction platform has reportedly added internal market makers who may trade against customers. This initiative is designed to boost liquidity, as Polymarket has historically relied on large traders, often referred to as "whales," to maintain a selection of positions.
The introduction of an in-house market maker feature has previously drawn criticism, with concerns that it could potentially skew market dynamics by trading against retail participants.
These hiring announcements coincide with circulating rumors about prominent market makers, such as Wintermute, potentially joining Polymarket. The platform is also closely monitored for the activity of high-profile whales and accounts with notable winning streaks.
Polymarket Whales Retain Outsized Influence
Despite Polymarket's growth, concerns persist that the influence of whales might skew predictions. Currently, the platform's accuracy relies on a combination of retail participation and the collective knowledge shared on social media.
Polymarket explorers have also identified accounts linked to Wintermute's wallets. The platform has evolved to a point where specialization is becoming evident, with traders seeking arbitrage opportunities, leveraging niche expert knowledge, and aiming to be the first to ascertain accurate odds.
Crypto market maker Jump Trading recently joined Kalshi, a move that has opened the door to the potential assistance of market makers in such platforms.
According to Bloomberg, Polymarket has been actively reaching out to traders, including those with professional sports betting track records, to join its in-house trading team. This information comes from unnamed sources familiar with the matter.
Market Makers Challenge Polymarket’s Neutrality
During its ascent in 2024, Polymarket was positioned as a tool for truth discovery, driven by the aggregated opinions of its distributed traders. In contrast, Kalshi has adopted a different strategy, employing an in-house team that frequently trades against its users.
This approach mirrors the dynamics of traditional sportsbooks, where the platform sets odds and profits from customer losses. However, a market maker can also serve the crucial function of taking less popular positions, thereby ensuring that specific markets remain liquid.
The mention of an in-house team comes as Polymarket prepares for its launch in the US market, commencing with a closed beta of its iOS app. The app is already gaining traction and shows promise for mainstream adoption. The platform has accumulated over $286 million in open interest, demonstrating significant vertical growth over the past two months.
While Polymarket has not yet surpassed its open interest record from late 2024, it is currently on a trajectory for rapid expansion.
Polymarket has emerged as a significant trading venue, recently expanding its volumes to surpass the activity seen in Solana's meme token markets. Prediction markets are also gaining influence over perpetual futures markets, offering greater simplicity and requiring no specialized technical or trading knowledge.
Polymarket has also become more appealing due to its absence of the rapid liquidations and losses characteristic of other crypto markets. In November, Polymarket recorded a milestone with over 494,000 active traders.