This week in prediction markets:
Is Donald Trump really “launching a coin”? Some Polymarket bettors say shilling World Liberty Financial doesn’t count.
Are PoliFi tokens surging because of limited upside in prediction markets?
Canada’s Justin Trudeau is in trouble, but Polymarket bettors doubt there will be an election this year.
A presidential candidate starting a business on the campaign trail certainly is unprecedented, but that’s just what Donald Trump is set to do Tuesday morning with the launch of his decentralized finance (DeFi) project World Liberty Financial.
On a Monday X space, the team behind the project said they are looking to raise $300 million with the token sale and have 100,000 accredited investors on the whitelist.
Yet a Polymarket contract asking if Trump will launch a coin before the election gives it just an 83% chance of happening – even though Trump family members and associates confirmed a token is in the works during a September livestream and the post on X announcing the launch promises the start of a public sale.
Why the uncertainty? It’s over whether this counts as Trump “launching a coin.”
The market’s rules say it will resolve to “yes” if “conclusive, definitive evidence emerges that Donald Trump was involved in the deployment of a new token by” Election Day, “based on a consensus of credible sources.”
Some are contesting Trump’s “involvement.”
One holder by the name of Asherwow, who holds over 8,700 shares of the “No” side of the contract, argued in Polymarket’s comment section that “being an affiliate does not necessarily mean you are involved in the deployment of the coin.”
Trump would have to be more than having an “indirect business relation” for it to count, Asherwow wrote.
Another No holder by the name of Lawyered.eth points to language from the white paper, first reported by CoinDesk, which reads: “World Liberty Financial is not owned, managed, operated, or sold by Donald J. Trump, the Trump Organization, or any of their respective family members, affiliates, or principals… World Liberty Financial and $WLFI are not political and have no affiliation with any political campaign.”
Those on the yes side, however, use a more liberal definition of “involvement,” and say the doubters are being pedantic.
“Should he also write the smart contract himself and deploy the liquidity to Uniswap?” asked one Yes holder.
When the contract resolves after Nov. 4, should there be a dispute on the outcome, it will be sent over to UMA, a decentralized oracle service that referees the platform’s crypto-based prediction markets. UMA token holders vote on the resolution, though Polymarket has overruled UMA before.
Trump’s odds of winning the 2024 U.S. election surged this month, bringing what was a tie in the first week of October to what’s now a nearly 8.5 percentage point gap in the Polymarket odds.
Meanwhile, in the last two weeks, the TRUMP (MAGA) token is up 63%, according to CoinGecko data, outperforming the CoinDesk 20 (CD20), a market index that measures the performance of the largest digital assets, which is down 2%.
In an interview with CoinDesk, Steven Steele, the MAGA project’s marketing director, said part of the token’s appeal is that it has more room to grow than Trump’s Polymarket odds, which have less upside the higher they climb.
“Buying TRUMP as a bet on Donald Trump winning the election now becomes more attractive, pushing more capital into TRUMP,” Steele said in an interview with CoinDesk. “This offers significantly more upside than betting markets.”
On the other hand, if Trump wins, Polymarket traders who bet on his victory are entitled to $1 worth of crypto for every “yes” share they hold, whereas meme coins guarantee no payout and trade solely on vibes.
There have been other attempts to amplify the upside of prediction markets in the form of decentralized exchanges (DEXs), adding leverage to Polymarket contracts.
Market data, however, shows this hasn’t really caught on quite yet.
Checking DEX D8X’s leveraged prediction market shows low open interest available and a maximum 2x leverage to those wanting to trade the Trump “yes” side.
Meanwhile, the TRUMP token has had nearly $9.3 million in trading volume during the last 24 hours, according to CoinGecko data, pushing its market cap over $200 million.
Canada’s Prime Minister, Justin Trudeau, is facing a revolt by high-ranking Liberal members of parliament and the continued threat of a non-confidence motion – a feature of the Westminster system where opposition parties can topple governments – but Polymarket bettors don’t think there will be an #election2024 in the Great White North.
Around 20 Liberal MPs have reportedly signed a document urging Trudeau to step down, expressing concerns over declining poll numbers. Canadian pollster Angus Reid gives Trudeau a 30% approval rating. Surely with a minority government, where opposition parties, combined, have more seats than the ruling party, this would make for election season, right?
Not quite.
Although the Liberals hold only a minority of seats, they have managed to maintain power with the support of at least one other party during confidence votes.
Both the Bloc Quebecois and the NDP have recently declined to back a Conservative-led non-confidence motion, with Bloc leader Yves-Francois Blanchet and NDP leader Jagmeet Singh signaling they would not risk triggering an election that could favor the Conservatives.
Polymarket bettors give approximately the same chances of that happening as an election.
So even though Trudeau, personally, remains unpopular, until Canada’s other opposition parties push for a motion of non-confidence, the status quo likely remains.