Polymarket Considers Stablecoin Launch to Capture Yield from USDC Reserves
The crypto prediction market Polymarket is weighing two options: the issuance of its own Polymarket stablecoin or a revenue-sharing agreement with Circle, the USDC issuer.
People close to the situation state that the main reason for Polymarket’s approach is the possibility of making profits by putting USDC to use through the yield generation process. Currently, all platform transactions are being settled in USDC, which results in a constant cash flow and demand for the token. Nevertheless, the interest earned on these reserves is pocketed by Circle. By introducing a stablecoin that is native to Polymarket, the latter could keep the profit with them.
The increasing volume of trading on the platform has solidified stablecoins’ position as the main beneficiaries and Polymarket’s management now anticipates stablecoin issuance as a highly profitable step forward, particularly in the context of the new stablecoin legislation in the U.S. that was enacted last week. The new regulatory framework is believed to allow more crypto companies and financial institutions to come into the market.
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The launch of a stablecoin still remains a complex and costly endeavor. To fight off competition, Circle is purportedly cutting off revenue-sharing agreements with exchanges and other tech companies.
The decision of Polymarket regarding its next step may indicate a trend of crypto exchanges that want to be less reliant on established stablecoin issuers and want to move to an independent revenue model.
Growing Popularity and Regulatory Changes
This is taking place as stablecoins become one of the main beneficiaries of Polymarket’s increasing customer base and transaction volume. As per the data from SimilarWeb, the platform attracted almost 16 million visitors in May alone and the total bets placed during the U.S. election last year reached over $8 billion.
