Ethereum’s Vitalek Buterin supports Polymarket in face of gambling allegations

Lea Hogg August 26, 2024

Vitalik Buterin, co-founder of Ethereum, has recently engaged into the debate surrounding Polymarket, a decentralised prediction market, challenging assertions that it amounts to gambling. His remarks come as discussions intensify over the role and perception of prediction markets within the decentralised finance (DeFi) ecosystem, highlighting broader misunderstandings of such platforms.

Polymarket, a platform that allows users to wager on the outcomes of future events, has been the subject of controversy, with critics likening it to a form of gambling. These criticisms have sparked concerns over the legal and ethical implications of decentralised prediction markets. Buterin, however, argues that these critiques stem from a fundamental misunderstanding of the purpose and function of such markets.

Buterin contends that prediction markets like Polymarket serve as valuable epistemic tools, providing the public with insights into the likelihood of future events in a way that is less prone to bias than traditional news sources or social media. He suggests that these markets offer a clearer, more accurate gauge of public sentiment and probabilities regarding significant events, which can inform decision-making processes at various levels, including governance. The Ethereum co-founder’s defence of Polymarket comes in response to a broader conversation initiated by a user named “strobie reeeee,” who pointed out that the confusion surrounding prediction markets is often tied to their association with DeFi. The user noted that DeFi, particularly during the boom of 2021, became synonymous with unsustainable token issuance schemes, leading to skepticism about its long-term viability. This perception, they argued, has unfairly coloured the public’s view of prediction markets.

Prediction markets and stablecoins

Buterin acknowledged these concerns but clarified that his stance on DeFi is nuanced. While he remains cautious about certain aspects of DeFi, particularly those that prioritise short-term gains over sustainability, he is supportive of decentralised applications that have practical utility and long-term potential. He specifically highlighted prediction markets as a category of decentralised applications that contribute meaningfully to information sharing and decision-making processes. In addition to defending the utility of prediction markets, Buterin pointed to the growing adoption of Polymarket as evidence of its value. Polymarket has seen a significant increase in user engagement over the past year. The platform has experienced steady growth in both trading volume and user accounts, with monthly active users approaching 54,000. Furthermore, the platform’s open interest and trading volumes have surged, surpassing $100 million for the first time in its history, signalling strong and sustained interest from the community. This surge in adoption is not just a reflection of market speculation but also of the increasing recognition of prediction markets as tools for aggregating diverse opinions and forecasting future events. Buterin’s comments suggest that the value of these markets extends beyond mere financial speculation, offering insights that can be harnessed for more informed governance and decision-making. Buterin also touched on the role of stablecoins in the broader DeFi landscape, expressing a preference for decentralised options like RAI over more centralised alternatives like USDC. However, he acknowledged the practicality of USDC for certain use cases, such as international transactions and donations, while emphasising the need for the continued development and adoption of decentralised stablecoins. Buterin’s defence of Polymarket reflects the potential of decentralised prediction markets as tools for societal benefit, countering narratives that reduce them to mere gambling platforms. His remarks reflect a broader vision for the future of DeFi—one that prioritises sustainability, utility, and the democratisation of information.