Introduction

The increasing liquidity and mindshare of crypto-based prediction markets like Polymarket have captured increasing sums of attention, ramping up as we approach the US Presidential elections. Following the latest $70M raise by Polymarket, which is positioning itself as the market leader, the $AZUR token launch, and the advent of new exchanges built on top of the Monaco protocol on Solana, we are starting to see the first signs of adoption in this market sector. Given that we expect to see more competitors entering this segment, each with their own token, the following report will highlight some of the setbacks and challenges that these projects might face in the race for market share and user retention.

Source: Kaito.ai – Prediction Markets are attracting more mindshare, driven by the ambition to replace legacy media with decentralized sources of information that are aggregated through permissionless markets and citizen journalism

Stemming from well-known economic challenges like the no-trade problem, crypto prediction markets might be subject to the same fate as their Web2 counterparts. Even though regulatory barriers are often cited as the primary impediment, it might actually be the lack of substantial demand that remains the core issue. This report will explore why these markets could struggle to gain traction despite the expectation of sudden bursts of attention in the upcoming months.