Polymarket Liquidity Truth: Data Revealing the Cause of Dopamine Deficiency

What exactly is the cause of dopamine deficiency? This is not only a neuroscience issue but also explains why many prediction markets on Polymarket are deserted. After analyzing the historical data of 295,000 markets on Polymarket, PANews found that the distribution of market liquidity is not uniform but driven by users’ desire for “immediate feedback.”

Short-term Markets: The Gambling Hall of Dopamine Addiction

Among all prediction markets, ultra-short-term events have become the most active battleground. Out of 295,000 markets, 67,700 have cycles shorter than 1 day, accounting for 22.9%; 198,000 have cycles shorter than 7 days, accounting for 67.7%.

However, these markets face an awkward reality: among 21,848 ongoing short-term markets, 13,800 (about 63%) have zero 24-hour trading volume. The clear reason for dopamine deficiency here is—no immediate win or loss results can be generated, so investors have no motivation to participate.

This scene once played out during Solana’s MEME coin frenzy. Tens of thousands of tokens launched, most of which went unnoticed. Prediction markets are now repeating this pattern, only the event lifecycle has shifted from unknown to certain.

In terms of liquidity, over half of the ultra-short-term markets have less than $100—completely insufficient to support any sizable trades. Sports and crypto market predictions dominate the short-term markets, with sports averaging a trading volume of $1.32 million, while crypto is only $44,000. For users hoping to profit from short-term crypto price movements through predictions, there are no enough liquidity counterparts.

Long-term Markets: Capital Accumulation in Macro Hedging

Contrary to the numerous event contracts in short-term markets, long-term markets are few but attract significant capital. There are 141,000 markets with cycles of 1~7 days, but only 28,700 markets with durations over 30 days. Yet, these long-term markets gather the most funds—markets over 30 days have an average liquidity of up to $450,000, 45 times that of markets within 1 day.

Why do large funds prefer long-term predictions? The reason is that these markets offer deep macro strategic space, satisfying another dopamine need—the sense of superiority in understanding complex issues. The US political classification is a favorite among long-term markets, with an average trading volume of $28.17 million and an average liquidity of $811,000. These markets involve complex geopolitical and economic expectations, attracting large capital with macro cognition advantages.

In the crypto realm, funds are also shifting toward long-termism—predicting whether Bitcoin will break $150,000 by the end of the year or the trend of a token’s price over several months. In this context, prediction markets have become a simple options hedging tool rather than a place for short-term speculation.

The Polarization Phenomenon in Sports Markets

Sports predictions are the engine of activity on Polymarket, with current active markets reaching 8,698, about 40%. But the distribution of trading volume is strangely polarized: ultra-short-term (less than 1 day) averages $1.32 million, mid-term (7~30 days) only $400,000, while ultra-long-term (more than 30 days) skyrockets to $16.59 million.

This reflects a split in the real needs of sports prediction participants: one group seeks “immediate results” with high-frequency players needing quick dopamine feedback; another large capital group engages in “season-long bets,” requiring full season cycles for hedging. Mid-term event contracts have instead become a forgotten corner.

The Cold Start Trap of Real Estate Predictions

The longer the time horizon, the better the liquidity seems, but this logic fails in certain categories. Real estate predictions should be high-quality assets with “relatively high certainty and cycles over 30 days,” but they face poor liquidity—this is a concrete manifestation of dopamine deficiency in segmented markets.

In contrast, the US 2028 presidential election prediction far exceeds the overall market average in both liquidity and trading volume. The difference is that the real estate market lacks two elements: first, high-frequency event-driven volatility; second, stories that most investors can understand. When new asset classes are launched, professional players have no counterparts, and amateur players dare not enter, creating an awkward no-man’s land.

Liquidity Concentrates in a Few “Super Events”

After dividing by trading volume, a harsh truth emerges: markets with capital accumulation ability (trading volume over $10 million) number only 505 but account for 47% of total trading volume. Meanwhile, markets with trading volumes between $10,000 and $100,000 total 156,000 contracts but only account for 7.54% of trading volume.

For most prediction contracts lacking narrative density, “going to zero upon launch” is the norm. Liquidity is not evenly distributed like sunlight but focused around a very few super events. Only markets that can provide continuous dopamine stimulation or deep macro strategic engagement can survive.

The Geopolitical Rise and Dopamine Effect

An interesting phenomenon is the explosion of the “geopolitical” category. There are only 2,873 historical contracts in this category, but currently 854 are active, accounting for 29.7% of active markets—the highest in the entire market. This indicates that geopolitical-related contracts are rapidly increasing and becoming the most concerned topics among users.

Why is geopolitical prediction so attractive? Because it satisfies two dopamine needs simultaneously: one is short-term real-time news feedback stimulation; the other is the long-term sense of control over macro patterns. This dual drive makes it one of the most liquid sectors.

Conclusion: Recognize the Nature of Liquidity

The core logic behind prediction market liquidity analysis is actually very simple—either provide immediate dopamine feedback (like sports short-term markets) or offer deep macro hedging space (like political long-term markets). Markets lacking narrative density, with feedback cycles that are too long and insufficient volatility, are doomed to struggle in a decentralized order book.

The reason for dopamine deficiency is not in market design but in user psychology. Polymarket is evolving from a “predict everything” utopia into an extremely professional financial tool. For participants, only places with abundant liquidity reveal value; where liquidity is scarce, only traps remain. Perhaps this is the greatest truth that data tells us.