A source said Polymarket would create its own stablecoin to own the yield-generating USD reserves that back the amount of Circle’s dollar-pegged token, USDC.
According to a person familiar with the plans, Polymarket, the cryptocurrency-powered prediction market that recently attained a billion-dollar valuation, is deciding whether to introduce its own customized stablecoin or accept a revenue-sharing deal with Circle based on the amount of USDC held on the platform.
The motivation for Polymarket to create its own stablecoin is simply to own the yield-generating reserves that back the large amount of Circle’s USDC dollar-pegged token used to make bets on the popular betting platform, the person said.
A Polymarket representative said they haven’t yet made a decision on the stablecoin question.
Legislation around stablecoins passed in the U.S. last week makes issuing a stablecoin all the more attractive a business proposition for both crypto-native firms and more traditional finance players alike, who may be eyeing the success of stablecoin-issuing giants Tether and Circle.
That said, launching a stablecoin presents a complex challenge for many firms. Additionally, USDC issuer Circle cuts revenue-sharing deals with exchanges, payment firms, and other fintechs to remain competitive in the rapidly evolving space.
For Polymarket, issuing its own stablecoin is a much easier lift from a regulatory standpoint, according to the source.
“A lot of stablecoin value is being locked by Polymarket in their betting pools, and so some kind of mechanism to get the yield is wanted by them,” the person said.
In the case of Polymarket, it’s a closed ecosystem and all they really need to do is to be able to exchange USDC or USDT into whatever their custom stablecoin is. They don’t have to worry about the last mile on-ramp and off-ramp. That’s a very simple thing to build, and easy to secure and control.
A request for comment was not immediately returned by spokespeople for Circle.
The amount of USDC on Polymarket fluctuates with betting activity on the platform. However, users placed some $8 billion in bets during last year’s U.S. election cycle, and the website attracted some 15.9 million visits in May, according to SimilarWeb.
The company is looking to formally reenter the U.S. with the acquisition of U.S.-based QCEX, following the closure of civil and criminal investigations into its allowing U.S.-based customers to place bets on its platform.
