Author: Frank, PANews
Original Title: Delving into 290,000 Market Data Points: Revealing 6 Truths About Polymarket Liquidity
Previously, PANews conducted in-depth research on prediction market strategies, with one key finding being: the biggest obstacle to the effectiveness of many arbitrage strategies may not be the mathematical formula of the strategy itself, but rather the depth of liquidity in the prediction market.
Recently, after Polymarket announced the launch of its US real estate prediction market, this phenomenon seems to have become more apparent. Following the launch, the daily trading volume for this series was only a few hundred dollars, far from the anticipated buzz. The actual market activity is much lower than the discussion热度 on social media. This seems both滑稽 and反常, so it might be necessary to conduct a comprehensive investigation into prediction market liquidity to reveal several truths about it.
PANews extracted historical data from 295,000 markets on Polymarket to date and arrived at the following results.
1. Short-Term Markets: A PVP Battlefield Comparable to MEME Coins
Among the 295,000 markets, 67,700 have a cycle of less than 1 day, accounting for 22.9%, and 198,000 have a cycle of less than 7 days, accounting for 67.7%.
Among these ultra-short-term prediction events, 21,848 are currently active markets, of which 13,800 have a 24-hour trading volume of 0, accounting for approximately 63.16%. This means that on Polymarket, a large number of short-term markets are currently in a state of no liquidity.
Does this state seem familiar?
During the peak frenzy of MEME coins, tens of thousands of MEME coins were also issued on the Solana chain, and the vast majority of these tokens similarly went unnoticed or died out quickly.
Currently, this state is being replicated in prediction markets, except that compared to MEME coins, the event lifecycle in prediction markets is predetermined, whereas the lifecycle of a MEME coin is unknown.
In terms of liquidity, more than half of these short-term events have less than $100 in liquidity.
In terms of categories, these short-term markets are almost entirely dominated by sports and crypto price predictions. The main reason is that the judgment mechanisms for these events are relatively simple and mature, typically involving questions like whether a certain token will rise or fall in 15 minutes, or whether a certain team will win. However, possibly because the liquidity is simply too poor compared to crypto derivatives, the crypto category is not the most popular "king of short-term."
Sports events hold absolute dominance. Analysis shows that the average trading volume for sports events with a prediction cycle of less than 1 day on Polymarket reaches $1.32 million, while for crypto it's only $44,000. This also means that if you hope to profit by predicting short-term cryptocurrency movements in prediction markets, there may not be enough liquidity to support it.
2. Long-Term Markets: The Sedimentation Pool for Big Money
Compared to the numerous short-term event contracts, the number of markets with longer time cycles is much smaller.
On Polymarket, markets with a 1~7 day cycle number 141,000, while markets greater than 30 days number only 28,700. However, these long-term markets have accumulated the most capital. The average liquidity for markets greater than 30 days is $450,000, while liquidity for markets under 1 day is only around $10,000. This also indicates that large funds prefer to position themselves in long-term predictions rather than participate in short-term speculation.
In long-term markets (greater than 30 days), aside from sports, other categories show higher average trading volumes and average liquidity. The category most favored by capital is US politics, where the average trading volume reaches $28.17 million and average liquidity reaches $811,000. The "Other" category also performs well in attracting capital沉淀, with average liquidity reaching $420,000 (here, "Other" covers topics like pop culture, social issues, etc.).
In the field of crypto market predictions, capital also leans towards long-termism, such as predicting "Will BTC break $150,000 by year-end?" or whether a certain token's price will fall below a certain level within a few months. In prediction markets, crypto predictions resemble a simple options hedging tool rather than a short-term speculative tool.
3. The Polarization of Sports Markets
Sports predictions are currently one of the main contributors to Polymarket's daily active users, with currently 8,698 active markets, about 40%. However, looking at the distribution of their trading volume, sports markets of different cycles show huge disparities. On one hand, the average trading volume for ultra-short-term predictions of less than 1 day reaches $1.32 million. On the other hand, the average trading volume for mid-term markets (7~30 days) is only $400,000, while the average trading volume for ultra-long-term markets (greater than 30 days) is as high as $16.59 million.
From this data, it appears that users participating in sports predictions on Polymarket either seek "instant results" or are making "season-long bets"; mid-term event contracts are反而 not very popular.
4. Real Estate Prediction Launch Faces "水土不服" (Difficulty Adapting)
After analyzing a large amount of data, a surface-level result suggests that prediction events with longer durations似乎 have better liquidity. But sometimes, when this logic is applied to specific or more细分 categories, this characteristic fails. For example, the real estate prediction mentioned earlier is a market with relatively high certainty and a time cycle greater than 30 days. Yet predictions like the outcome of the US 2028 election lead the entire market in both liquidity and trading volume.
This或许 reflects the "cold start困境" that new asset categories (especially niche, professionally demanding ones) might face. Unlike simple, intuitive event forecasts, participation in real estate markets requires higher专业性 and cognitive understanding. The market currently seems to be in a "strategy磨合期" where retail participation enthusiasm remains limited to spectating. Of course, the天然 low volatility of real estate markets also exacerbates this cold start issue. The lack of frequent event-driven volatility reduces the enthusiasm of speculative capital. Combined, these factors leave these relatively niche markets in an awkward state: professional players lack counterparties, while amateur players dare not enter.
5. "Short-Term" or "Sedimentation"?
Based on the above analysis, we can re-categorize the different classifications in prediction markets. Categories like cryptocurrency and sports, which are ultra-short-term, can be termed short-term markets. Categories like politics, geopolitics, and technology lean more towards long-term sedimentation markets.
Behind these two types of markets are different investor groups. Short-term markets are显然 more suitable for those with small capital or those requiring higher capital turnover rates. "Sedimentation" markets are more suitable for those with large capital seeking relatively higher certainty.
However, when markets are划分 based on trading amount, we see that markets with capital sedimentation capabilities (greater than $10 million) account for 47% of the total trading volume, even though their contract count is the smallest, at only 505. Markets with trading volumes between $1,000 and $100,000 constitute the vast majority in number, with total contracts reaching 156,000, but their trading volume is only 7.54%. For the vast majority of prediction contracts lacking top-tier narrative power, "listing即归零" (going to zero upon listing) is the norm. Liquidity is not evenly distributed sunlight, but rather a spotlight汇聚 around a very few super events.
6. The "Geopolitics" Sector is Rising
The ratio "Current Active Number / Historical Number" can indicate the growth momentum of a category. Currently, the sector with the highest growth efficiency is undoubtedly "Geopolitics". The total historical event contracts for geopolitics are only 2,873, but there are currently 854 active, an active ratio of 29.7%, the highest among all sectors.
This data indicates that the number of new contracts in the "Geopolitics" category is rapidly increasing, making it one of the topics prediction market users are most concerned about currently. This can also be glimpsed from the recent frequent exposure of insider addresses related to several "Geopolitics" contracts.
Overall, behind the liquidity analysis of prediction markets, whether it's the sports sector as a "high-frequency casino" or the politics sector as "macro hedging," the core of their ability to capture liquidity lies in either providing instant dopamine feedback or offering deep macro博弈 space. Those "鸡肋" (chicken rib - meaning unappealing) markets that lack narrative density, have excessively long feedback cycles, and lack volatility are注定难以 to survive in the decentralized order book.
For participants, Polymarket is evolving from a "predict anything" utopia into an extremely specialized financial tool. Recognizing this is more important than blindly searching for the next "100x prediction." In this track, value is only discovered where liquidity is abundant; where liquidity dries up, there are only traps.
This is perhaps the biggest truth the data tells us about prediction markets.
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