Polymarket value drops off a cliff after settling its biggest political market

Polymarket settling its biggest historical betting pair has triggered an immediate withdrawal of value from the platform. The betting market on the winner of the US election raised total value locked to record levels, but now, Polymarket faces the biggest outflow of value since its inception.

Polymarket lost up to 50% of its value locked after settling the betting market on the winner of the US presidency. The betting platform now carries a reported $181M in open interest, sharply down from $511M on November 6. Even the zero fees and the immense popularity of the platform did not stop the outflows.

The loss of interest in Polymarket right after the election follows a trend similar to PolitiFi tokens, which were sold on the actual news as they lost their memetic value.

Even now, Polymarket continues to carry a wide selection of political bets, though at a much smaller scale. The inflow of whales on Trump’s ‘Yes’ token was the main source of growth, though small-scale bets also fed off the hype. At one point, inflows from whales reached $70M, even without including unreported multi-accounting.

In the immediate aftermath of the US elections, Polymarket has reverted to sports as its top betting activity. Other bets are still available but at much lower trading volumes and open interest.

Polymarket suggests imminent airdrop

As the holders of winning bets set to withdraw their earnings, Polymarket sent out a message hinting at a potential airdrop. The message did not work to stop outflows, especially for whales cashing out. However, it may work with some users. Some think the potential airdrop ay even be available to users with relatively small bets.

The Polymarket airdrop has been anticipated for a while, similar to expectations for Pump.fun. The speculative markets have been among the best-performing apps. However, Polymarket’s popularity may have been boosted by its zero-fee operation, which may also mean it is operating at a loss.

Polymarket did not launch an airdrop or native token during the hype phase of the US elections, although users often asked about both. A token launch before the election would have made the new token susceptible to a crash. So Polymarket may have been right to delay the airdrop.

As with other airdrops, the exact conditions are unknown, but the messages users received suggest withdrawing now may disqualify their wallets.

One potential task for the Polymarket airdrop may be the requirement to hold liquidity on the platform. As of now, the only known criterion is interacting with the platform.

In the past, some of the Polymarket activity has been tied to expectations of an airdrop. There have also been signs that airdrop farmers have been trying to secure their position. One of the most active cohorts of wallets are those with small bets, but a large turnover. In terms of volumes, the biggest POLY airdrops may still go to whales even if it also benefits high-frequency traders.

Daily trader counts down after US elections

Small-scale traders also joined whales in the singular focus on Polymarket’s biggest betting pair. With the action now settled, smaller markets are failing to absorb the bets as daily active traders are now back to early October levels.

Polymarket activity returned to pre-October growth levels after big bets were settled. | Source: Dune Analytics

The whales of the pre-election period have been mostly raking in their gains. One notable exception is the trader Theo4, revealed as the French trader who achieved outsized gains of over $47M.

The Theo4 wallet, which is still at the top of the Polymarket leaderboard, made one last bet two days ago. Theo4 bought ‘No’ tokens on the issue of Kamala Harris winning the popular vote. The market is close to resolution and may add another winning position.

Theo4 bought the ‘No’ token at $0.28. The token is already at $0.99 and will possibly be resolved on November 8 for the 7,503 shares the French trader holds. The other known account and the main winner, Fredi9999, stopped making new bets more than two weeks ago.

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