With $4M round, Polymarket predicts success

At 22, Shayne Coplan is best known as the youngest investor in Ethereum’s presale. He’s out to change that.

An Upper West Sider who describes himself as having “that New York kind of a hustler/trader knack,” Coplan got into cryptocurrencies by way of peer-to-peer music filesharing site Napster. From there he moved into GPU mining in 2013, while still a freshman at Beacon high school. A year later he found Ethereum. 

More recently, he dove into DeFi, with staking delegation startup Union Marketplace, before pivoting to Polymarket, a blockchain-based prediction market built on—and now on top of—the Ethereum blockchain.

On Oct. 19, CEO Coplan announced that Polymarket had raised $4 million in a funding round led by Olaf Carlson-Wee’s Polychain Capital and including big-name investors like Naval Ravikant and Meltem Demirors.

“We’ve been fascinated with information markets for some time, but many solutions in the space have been plagued with UX [user experience] and liquidity problems,” Carlson-Wee said in a release. “Shayne and his team understand this deeply and have incorporated these learnings into their inventive, user-centric product approach.”

Blockchain-based prediction markets like Polymarket allow people to bet on real world events—essentially making them put their money where their mouth is on questions ranging from who will win a presidential debate to whether Drake will release a new studio album this year. Broadly, the idea to use the free market to get better and more accurate information than is available through the tornado of misinformation and bias unleashed by social media.

It’s an idea that has proven popular but also difficult to build well. Polymarket has focused on making it easy to navigate the site. Signing up requires just an email and a credit or debit card, and no blockchain knowledge is required.  

Now that the decentralized information market platform has transitioned from badly clogged Ethereum to a Layer 2 scaling solution, betting is free. Beyond that, there is no cap on how much can be invested. 

At the same time, Polymarket didn’t just throw open the doors. The company began Phase 1—Phase 2 begins with the funding announcement—by onboarding people through the wallet and app browser MetaMask. While that meant the initial users came from the crypto community, “that is not our end game whatsoever,” Coplan said. Indeed, in the three months since Phase 1 launched, it has grown to attract users from outside the crypto universe.

An efficient market

Coplan believes Polymarket does prediction markets better than any of its competitors. In part that’s because of a launch that is both fast and slow.

“We didn’t buy into the notion that it takes five years to build something that barely even works,” Coplan told Modern Consensus. “So, we went out to go and build this vision of an information markets platform, and just do things the right way—focused on product, focused on demand rather than theory and academics. And, we delivered the product. It’s still in beta, but it works really well. And it’s just been super exciting to get to this point.”

Apart from participants winning or losing based on bets, the goal is for anyone to be able to look at the site’s market activity—when the prices rise and fall—”and be able to gauge from that, in correlation with news and narratives that are coming out of the New York Times and whatnot, what the hell really is going on,” said Coplan. 

It is the same way the stock market factors in prices and facts, but also sentiment. “Price discovery is the best information aggregation mechanism,” he argued.

“I am generally apolitical and I’m kind of skeptical,” Coplan said. “So, what really does it for me… is when I look at markets. When I look at a betting market, or when I look at the stock market and things change—[for me] this is the real deal,” he added.

The results bear that out, Coplan said, pointing to the “outcomes of markets like the Microsoft TokTok market, or the Yams governance market, where [Polymarket] successfully weeded through the noise of conflicting social media and press opinions and gave a really accurate forecast of what would happen that updated in real time.

“The coolest thing to us is finding the most contentious and highly debated topics and figuring out markets that will be effectively maintain relevance as the situation unfolds, aggregating liquidity in those very few markets that are pertinent to the event in a way where people can put their money where their mouth is. They can trade based on the news and, and challenge others to sign up, have skin in the game,” he said. Particularly those “who are showing their opinions without accountability,” Coplan added.

That said, it’s not exactly a free-for-all. Polymarket curates the questions being bet on, in part to ensure they are worded in a way that prevents them from being open to interpretation about results.