Author: locha, co-founder of Fuul; Translator: xz Golden Finance

Polymarket saw $9.55 billion in trading volume last month but generated virtually no revenue. On March 30, this will change: the platform will launch charging across the board in ten market categories. The question worth studying is not whether prediction markets are real or feasible, but how Polymarket got to where it is today.

1. Question: How to start a market that no one is using yet

The prediction market faces a severe cold start problem. Without liquidity, traders will not enter the market; without traders, liquidity providers will not enter the market - and both parties need to have accuracy in the market before they can trust it. Accuracy requires volume, and volume requires participation from both parties.

Two years ago, the entire prediction markets industry had only about 4,000 monthly active users and $15.8 billion in annual trading volume. Today, Polymarket alone has a monthly trading volume of $9.55 billion. The total industry transaction volume will increase to US$63.5 billion in 2025, a 4-fold increase year-on-year. In February 2026, Polymarket and Kalshi’s combined monthly trading volume reached $16.8 billion, pushing the industry’s annualized trading volume toward more than $200 billion.

How did you grow from 4,000 users to this scale? The answer isn't better products alone, but incentives.

2, Core concept: Follow the mature strategy of cryptocurrency exchanges

Polymarket does not create a new incentive model, but directly adopts the growth primitives that cryptocurrency exchanges have proven on a trillion-dollar scale.

• Referral Programs: Binance, OKX, and Bybit have all built large user bases through referral commission mechanisms, offering 10%-50% of trading fees to any user who brings in new traders. Binance has used this to expand to 280 million users and $20 billion in daily trading volume. This type of program converts every user into a distribution channel.

• Builder code:Hyperliquid is pioneering this model in the DeFi space: opening up API interfaces to developers, allowing them to route orders, attribute trading volume, and earn fees. In July 2025, the single-day revenue of the builder code on Hyperliquid exceeded $10 million, and applications such as pvp[.]trade and Axiom drove a large number of transactions through their own interfaces.

• Market Maker Rebate: All major exchanges will reallocate part of the taker fees to market makers. Subsidizing liquidity providers to narrow spreads and increase trading volume is the most classic approach in exchange design.

Polymarket is the first prediction market to run all three types of mechanisms simultaneously. But instead of rolling out all the mechanisms at once, they implemented them in phases over four years, with each phase targeting a specific bottleneck.

Phase One: Starting Liquidity from Scratch (2022-2023)

In early 2022, Polymarket launched a cycle-based liquidity mining plan: with a 7-day cycle, approximately 50,000 USDC and 10,000 UMA are distributed to all users who provide liquidity in each cycle. Rewards are calculated per block to ensure the order book remains active around the clock.

By March 2023, the program will be upgraded to a formal market maker reward program, with daily rewards based on spread tightness and order book depth. As of the beginning of 2025, it is estimated that the cumulative subsidy amount has reached tens of millions of USDC.

The goal is simple: create liquidity by incentivizing people to make products available. Without liquidity, there is no price discovery; without price discovery, the product cannot be established.

Phase 2: Capturing event-driven demand through active subsidies (end of 2023-early 2025)

Polymarket has invested more than $10 million in direct USDC incentives across hundreds of markets, superimposing event-specific accelerated incentives on top of its core market maker program. Elections, cryptocurrency cycles, major geopolitical events, etc., all have temporary high annualized yield pools and rebates based on trading volume. This is pure customer acquisition spend, backed by a treasury. Although the cost was high, the timing was precise.

The 2024 U.S. election will push prediction markets into the mainstream. In November 2024 alone, Polymarket attracted nearly 300,000 users to participate in betting, with a total amount exceeding US$2.5 billion. Polymarket offers the deepest order book depth precisely because it has continued to subsidize liquidity for two years.

Phase 3: Introducing a revenue mechanism to retain funds (September 2025)

Attracting traders to deposit funds is one problem, getting them to keep their funds on the platform between events is another.

The holding reward will be launched on September 24, 2025: In selected markets, an annualized USDC income of 4% will be provided for open positions, and will be distributed daily. Sampling positions on an hourly basis means rewards are tied to position persistence, not just trading activity. Polymarket borrows a basic model of DeFi (deposit income) and applies it to prediction markets.

At about the same time, the first version of the refer-a-friend program was quietly launched: new users who deposit funds through the referral code can receive a 10 USDC credit reward. This simple, low-friction entry method is designed to lower the cold start threshold for individual users, not just the market itself.

Phase 4: Starting the charging engine (January-March 2026)

At this point, the model becomes self-sustaining.

January 5, 2026: First, the taker fee will be implemented in the 15-minute cryptocurrency prediction market (when the probability is 50%, the fee peaks at 1.56%). The market maker rebate plan is launched at the same time, and the funds come from the above-mentioned handling fees. The key change is this: takers now provide capital to market makers. Liquidity is no longer subsidized by the treasury.

Mid-February: The fee and rebate mechanism is extended to sports (US college basketball, Serie A) and shorter-cycle cryptocurrency markets.

February 17th: Sponsored liquidity rewards are open to all users. Any user can deposit USDC into a smart contract, which automatically issues rewards to liquidity providers in any market of their choice. This democratizes incentives. Hedge funds, institutions and retail investors can now initiate liquidity in niche markets without Polymarket involvement.

March 6: Full coverage of handling fees in all cryptocurrency markets (1 hour, 4 hours, daily, weekly).

March 17-19: Over $2 million in targeted liquidity rewards for March Madness. Each NCAA men's basketball tournament game offers $100,000 in incentives, with approximately $6 million expected to be distributed throughout the schedule.

March 23-24: Take two measures at the same time. Market Maker Rebates Expand to Almost All New Markets. The complete referral program is open to all traders with a lifetime trading volume of more than $10,000: 30% of the taker fees generated by direct referrals, and 10% of the secondary referrals, valid for 180 days, and the plan lasts until December 2027.

March 30: The fee market expanded from two categories to ten categories. Categories such as politics, finance, economics, culture, weather, technology, etc. all started to generate revenue.

The Builder Code program will continue to operate during this period, providing developers with an API interface to route orders, attribute trading volume, and earn weekly USDC rewards. Before the referral program even launched, aggregators like Dome (acquired by Polymarket in early 2026), as well as open source tools like pmxt, were already built on this infrastructure.

The Builder Code program will continue to operate during this period, providing developers with an API interface to route orders, attribute trading volume, and earn weekly USDC rewards. Before the referral program even launched, aggregators like Dome (acquired by Polymarket in early 2026), as well as open source tools like pmxt, were already built on this infrastructure.

3. There are no points, no tasks, and no tokens. Only USDC

Every incentive Polymarket runs is paid in USDC. Liquidity rewards, market maker rebates, staking rewards, referral commissions – all settled in the same stablecoin that traders use to trade.

This is a carefully considered choice. This means every incentive has a clear and immediately visible cost and measurable ROI. This means Polymarket can account for its unit economics like a real business, rather than a growth experiment that relies on token subsidies. This also means that the transition from treasury-funded subsidies to fee-funded incentives is clear and smooth: same currency, same mechanism, different funding sources.

From "paying people to participate" to "paying fees to invite people to stay", this complete path has taken four years. Most cryptocurrency projects never complete this transition. Polymarket did it.

4. Current data overview (and why this is the bottom line, not the upper limit)

So what does this all mean? Castle Labs did the math: took the last 30 days of transaction volume for each category, applied the new fee structure, and estimated revenue.

This is a baseline, not a prediction. These markets have already reached this level of trading volume before charging fees or introducing referral programs. The flywheel of motivation hasn’t even started turning yet.

But the following data illustrates its conservatism: the recommended plan was just launched on March 23. For the first time, every opinion leader, key opinion leader, media company and content creator in the cryptocurrency space has a direct financial incentive to direct users to Polymarket: 30% of taker fees for direct referrals and 10% for secondary referrals, paid daily in USDC. This is the same mechanism that previously transformed crypto Twitter, YouTube, and trading academies into distribution machines for Binance and Bybit. However, today’s product is no longer a leveraged perpetual contract exchange, but something that even people outside the crypto circle are really willing to use.

Imagine the next development: a political podcast releases a recommendation link to Polymarket during the election season; a sports media account includes a recommendation code when embedding prediction market odds; a financial information email push links to the economic prediction market. Today, these promoters earn real income from every trader they bring on board. The referral program converts Polymarket’s entire audience into a paid sales team, and the potential user size of prediction markets is orders of magnitude greater than that of cryptocurrency exchanges.

5. Conclusion

The cryptocurrency industry has spent more than a decade answering the question "What's in it for?" Trading and speculation were the first undisputed answer. Stablecoins are not far behind. Prediction markets are becoming the next answer.

The launch of charging on March 30 is not an insignificant footnote, it is starting a flywheel of ultra-high-speed growth.