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

Title: Polymarket’s Escape from Polygon: The Economic Calculations Behind the Move

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 valuation expectations between the two have always been somewhat mismatched. As Polymarket continues to grow 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 operational 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 move 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 explosive growth once brought tangible direct economic benefits to Polygon. Data analyst dash, compiling data from Dune, shows:

· 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 comparison.

· First, in terms of capital locked, 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, we checked recent changes. Data analyst petertherock’s Dune statistics show that in November, Polymarket-related transactions consumed about $216,000 worth of gas, while Token Terminal reports that 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 measurement methods and timeframes, the similar results across multiple dimensions can serve as a rough estimate of Polymarket’s economic significance to Polygon.

Beyond quantifiable metrics like active users, capital locked, transaction volume, and gas contribution, Polymarket’s economic significance to Polygon also manifests in a series of more intangible yet 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 retained users’ ancillary behaviors. Beyond the prediction markets themselves, these users may also turn to other Polygon-based DeFi products for convenience, thereby boosting the overall ecosystem value of Polygon. These contributions are difficult to quantify with specific data but constitute the underlying network’s most valued and scarce “real demand.”

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 foundation to operate independently. This is no longer a question of “whether to leave,” but rather “when to leave.”

The reason for choosing to migrate at this particular moment mainly relates to the upcoming Polymarket Token Generation Event (TGE). Once Polymarket completes its token issuance, its governance structure, incentive mechanisms, and economic models will become relatively fixed, making subsequent underlying migrations significantly more costly and complex. Furthermore, upgrading from a “single application” to a “full-stack system of application + underlying layer” inherently involves a valuation shift. Building its own Layer 2 undoubtedly opens a higher ceiling for Polymarket’s narrative and capital potential.

In summary, Polymarket’s departure from Polygon is not merely 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 boils down to profit-seeking.

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