Polymarket announces its own L2, does Polygon lose its advantage?

Original Title: Polymarket Escapes Polygon: The Economic Account Behind the Exit

Original Author: Azuma, Odaily Planet Daily

On December 22, a development regarding the leading prediction market Polymarket drew widespread market attention—Mustafa, a team member of Polymarket, confirmed within the Discord community that Polymarket plans to migrate from Polygon and launch an Ethereum Layer 2 network called POLY, which is currently the project’s top priority.

An Unsurprising “Breakup”

Polymarket’s decision to leave Polygon is not unexpected. One is a popular application-layer representative, while the other is a declining underlying layer; the market enthusiasm and value expectations between the two have always been somewhat mismatched. As Polymarket grows into a new giant, Polygon’s unstable network performance (the most recent outage occurred on December 18) and its relatively weak ecosystem have objectively become limitations for the former.

For Polymarket, building its own portal means a win-win in both product and economic dimensions.

In terms of product, besides seeking a more stable operating environment, building its own Layer 2 network allows Polymarket to customize underlying features based on platform needs, enabling more flexible adaptation for future upgrades and iterations.

More importantly, this decision has significant economic implications. Building its own network means Polymarket can consolidate the economic activities and peripheral services generated around its platform into its own system, preventing related value from spilling over into external networks, and gradually accumulating a systemic advantage.

Explicit and Implicit Economic Contributions

As an application layer, Polymarket’s popularity once brought tangible direct economic benefits to Polygon. Data analyst dash compiled historical data on Dune showing:

· Polymarket’s active users this month: 419,309; total users historically: 1,766,193;

· Total transactions this month: 19.63 million; total transactions historically: 115 million;

· Total transaction volume this month: $1.538 billion; historical total: $14.3 billion.

Regarding how to evaluate Polymarket’s contribution to Polygon’s ecosystem economy, Odaily Planet Daily found an interesting coincidence in the data:

· First, in terms of locked funds, Defillama data shows that Polymarket’s total platform position is approximately $326 million, about a quarter of Polygon’s total locked value of $1.19 billion;

· Second, in terms of gas consumption, Coin Metrics estimated last October that transactions related to Polymarket consumed about 25% of Polygon’s total gas;

· Considering the data is somewhat outdated, recent changes were checked as well. Data analyst petertherock’s Dune statistics show that in November, Polymarket-related transactions consumed about $216,000 worth of gas, while Token Terminal’s data indicates Polygon’s total gas consumption for that month was approximately $939,000, also close to a quarter (about 23%).

While these figures may partly be coincidental due to differences in data collection methods and timeframes, the similarity across multiple dimensions provides a rough estimate of Polymarket’s economic significance to Polygon.

Beyond quantifiable metrics like active users, locked funds, transaction volume, and gas contribution, Polymarket’s economic importance to Polygon also manifests in a series of more intangible but equally real contributions.

First is the activation of stablecoin liquidity. All Polymarket transactions are settled in USDC, and its high-frequency, continuous trading activity objectively enhances the circulation demand and usage scenarios of USDC on Polygon. Second is the value of user retention behaviors. Besides the prediction market itself, these users may also turn to other Polygon-based DeFi products for convenience, thereby increasing the overall ecosystem value of Polygon. These contributions are difficult to quantify with specific data but constitute the most fundamental and scarce “real demand” that the underlying network values most.

Why Now? The Answer Is Not Hard to Guess

In fact, judging solely by user scale, data performance, and market volume, Polymarket already has the confidence to stand independently. This is no longer a question of “whether to leave,” but rather “when to leave.”

The reason for choosing to migrate at this moment mainly relates to the upcoming Polymarket Token Generation Event (TGE). Once Polymarket completes its token issuance, its governance structure, incentive system, and economic model will become relatively fixed, making subsequent underlying migrations significantly more costly and complex. Furthermore, upgrading from a “single application” to a “full-stack system” with both application and underlying layers inherently changes valuation logic. Building its own Layer 2 undoubtedly opens a higher ceiling for Polymarket in terms of narrative and capital.

In summary, Polymarket’s departure from Polygon is not just a simple underlying migration but a microcosm of the structural changes in the crypto industry. When top-tier applications develop the capacity to independently host users, traffic, and economic activities, if the underlying network cannot provide additional value, it will inevitably be “backstabbed.”

All for profit.

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