The Intercontinental Exchange (ICE) just announced that it is making up to a $2 billion investment in privately traded blockchain company Polymarket.
The investment was made at an $8 billion pre-money valuation, which results in the largest investment in a blockchain company made by a traditional financial services company.
In short, this is a landmark deal.
For those that aren’t familiar with ICE, it is the parent company of the New York Stock Exchange – home to the largest market capitalization for publicly traded equities. ICE is also a dominant force in energy, mortgage, and fixed income markets. It rules global markets with its exchanges and data services solutions.
If you want access to financial markets data, there’s a good chance that the data originated from ICE. Its status as critical infrastructure for public markets is what makes this investment in Polymarket so interesting.
The timing of the deal is no coincidence.
It comes on the heels of Polymarket securing approval from the U.S. Commodity Futures Trading Commission (CTC) last month to re-launch its prediction markets in the U.S. and also an undisclosed investment from 1789 Capital – a venture capital firm backed by Donald Trump Jr. – in August.
This deal would have been impossible last year due to the anti-crypto stance of the prior administration. The 180-degree swing towards regulatory clarity and support for the digital assets industry is what enabled a deal like this to be done. It is what the entire traditional finance industry has been waiting for…. A regulatory green light on crypto and blockchain technology.
The announcement acts as further proof for what regulators are implementing via “Project Crypto” and the stated plan to make America the “crypto capital of the world.”
But even still, most don’t realize the significance. This isn’t just a betting market nor just a data service play. It’s a financial primitive – a building block upon which other functionality can be built – that has an array of use cases that the market hasn’t figured out yet.
Polymarket is a platform that provides event-driven markets for investors or traders to place bets.
It might seem like a regular gambling site at first blush… You can place bets on who will win the Baseball World Series or the English Premier League.
But it’s much more powerful than that.
Let’s take a very timely topic to demonstrate how it works.
Polymarket has a market titled, “When will the Government shutdown end?” We can see the status of the prediction market for this question below.
Source: Polymarket.com
Individuals can place a bet on whether the government shutdown will end during a certain window. Let’s take the first date range, “October 6-9,” a window that we are currently in.
The market is currently saying there is only a 1% chance the government shutdown will end by the end of the day tomorrow.
If you thought the government shutdown would end tomorrow, you could buy “Yes” tokens for nine-tenths of a cent, or $0.009.
On the opposite side of the bet, if you thought there was no chance the shutdown would end by tomorrow, you could buy “No” tokens for a little more than ninety-nine cents or $0.995.
When the event matures come 12:01 am ET on October 10, the market will expire. If the government is still shut down, then all the “No” tokens will split the pot. The same goes for if the shutdown does end, with all “Yes” tokens would split the pot equally.
It’s important to note that this is actual capital at stake. There is no survey or public sentiment determined through anything other than what is being wagered.
The key here is that there are two sides to every trade/bet.
If we were to place a buy order for “No” tokens at $0.99 and somebody accepted that order, we would receive one “No” token, and the buyer would receive a “Yes” token for $0.01.
$1 then enters the pot, and each “No” or “Yes” token could win that $1 if their guess is correct.
These tokens act as their stake in the outcome and reward pool.
This creates market-driven predictions for real-world events. This is one of the reasons ICE is so interested in Polymarket. ICE can create data services around these various events to help traders better analyze the market.
A glance at Polymarket and we can quickly see some of the largest markets are associated with outcomes that drive financial markets. These are things like U.S. Federal Funds rate decisions, presidential outcomes, passage of legislation, and much more.
There are even markets around whether a company will beat its quarterly earnings figure.
It is easy to see how access to this data can be helpful for investors, individual or institutional, to better predict outcomes or position themselves ahead of certain events.
But that’s just scratching the surface…
Polymarket has the infrastructure upon which we can create new financial markets. This is what was meant when I referred to Polymarket as a financial primitive. It’s a form of infrastructure.
If we look at options markets, we start to see some familiarities. Options are traded instruments that have an expiration date and what’s called a strike price. If the underlying asset (stock, for instance) is trading above the strike price, then the options contract can realize a gain.
If the underlying price is below the strike, it’s worthless.
From this simple construct, we can see similarities to the “Yes” or “No” market from Polymarket.
From this simple construct, there has been an incredible amount of sophistication. Traders can hedge positions, sell volatility, create positions that are agnostic to changes in the price of the underlying asset, and so much more.
The diversity of the options market is something to behold. It’s why in 2024, over 47 million contracts changed hands each day on average.
And if we consider the potential of what Polymarket is becoming, we can start to envision a future where greater sophistication will enter these event-driven markets.
Investors who look to hedge interest rates in 2026 might want to enter Polymarket positions that revolve around the possibility of lower rates. This way, if the rates fall, a treasury holder can hedge the price change of their security using Polymarket.
Or perhaps a trader has a position in Lithium and wants to hedge their trade based upon an election in a foreign country, as it’ll directly affect the supply of the resource from the region. Hedging by trading on the outcome of an election is not possible in the public markets, but it is possible on Polymarket.
There’s no limit to what’s possible.
What it means to us is that Polymarket represents a new financial primitive from which future markets will emerge.
Take something far removed from stock trading, like insurance markets.
Will we pass away by a certain age? An insurance company can create markets that bucket people based on health, age, and other traits into various markets. Then, through their actuaries, they begin placing bets on the “Yes” or “No” side of markets based upon what their models are calculating.
Then, based upon our own health and age, we may enter into these markets to buy life insurance.
It might seem odd to think of life insurance as a betting market, but when we boil it down, that’s essentially what insurance is – whether some event happens or not within some timeframe.
The key here is that the marketplace is open for all.
This openness, or what we call permissionless markets, creates greater efficiency, price discovery, and liquidity.
Not to mention that when it comes to something like life insurance… we’re looking at future billion-dollar businesses, lower insurance costs since no middlemen, and likely easier access for individuals.
It’s exciting to dream up the possibilities. But here’s where things really matter…
Polymarket is not just an information market for sentiment related to specific events.
It’s a new financial primitive. And the secret to why Polymarket will be a winner lies with something we focus on at Permissionless Investor.
Polymarket functions on a public blockchain. We can see who owns “Yes” or “No” tokens for any prediction market at any given time.
This also lends its hand to faster utilization than if the markets were managed by a private company and not on a public blockchain. That’s because anybody can gain access to these market outcomes in real-time by viewing the blockchain.
There are no NDAs or business-to-business service contracts that must be signed. It’s simply a matter of builders building on top of what exists.
Nothing is stopping you from creating your own mobile app that lets people place bets on Polymarket or stream relevant event odds.
That’s the secret. And it only exists for projects that sit on public blockchains. Builders have less friction, can iterate faster, there’s more competition, and as a result, this unlocks more innovation at a speed unrivaled in the traditional financial services industry.
That’s why the SEC and CFTC are racing to bring the financial system onchain. They see the writing on the wall.
It’s also why the current administration wants to unleash this force of innovation in America. It represents a shift in productivity, new business ventures, greater revenues, and transactions. It even brings more transparency.
The speed at which applications, assets, and financial markets improve is unrivaled in this public blockchain realm.
This is what ICE realizes. It knows stocks are in the process of becoming tokenized and sitting on public blockchains. Robinhood has been building relentlessly in this direction. Even payment service providers are racing to move their systems onchain.
ICE is simply joining the race, pre-empting what is inevitable, and looking to aid in the creation of novel marketplaces that will give rise to more financial tooling… A solution that will dwarf what we see in the options world.
This investment is a bold move by ICE, a traditional financial services company. Despite understanding the value of what Polymarket has been building and how much value it is for a company like ICE, this is still an exciting development that most weren’t expecting.
It’s also a multi-billion-dollar vote of confidence in blockchain-based financial services infrastructure, and a sign of even more public blockchain-based services to come.
Your Pulse on Crypto,
Ben Lilly
Senior Crypto Analyst, The Bleeding Edge
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
