Elections, war, and now a potential govt ousting. Will Polymarket take it too far?

The escalating situation in South Korea has once again proven why Polymarket sets itself aside in the odd pricing business and why the US government tried to intimidate its creator. 

For context, Polymarket accurately predicted the escalation of political turmoil brewing in South Korea after President Yoon Suk Yeol declared martial law out of nowhere. The predictions market also gave people on the outside an early hint of where the heads of people were during the chaos. However, not enough were paying attention. 

Although, it might have something to do with mainstream media running circles around the happenings as usual, barely able to make sense of the chaos and thus, unable to properly inform the outside world of what was happening and why. 

What’s happening in South Korea? 

Chaos reigned as President Yoon Suk Yeol declared martial law in his country on December 3, 2024. In defense of his decision, he alleged that opposition lawmakers and North Korea had teamed up against him to paralyze the government. 

It was the first time martial law had been declared in the country in over four decades. There was immediate backlash, with the opposition tagging it unconstitutional and the National Assembly voting unanimously to annul it. 

Despite the vote, the Ministry of Defense remained adamant, insisting on martial law enforcement until the president rescinded it hours later and only under intense pressure. 

While the drama unfolded, the world would have been left behind in confusion but for Polymarket. The platform kept updating odds across different markets, including that the president would remove the martial law order and impeachment wagers. 

Of course, this was in response to the Democratic Party’s threat to accuse the president of treason and impeach him. As it stands, Polymarket predicts a 65% chance of the president getting impeached, odds that have been steadily rising since noon of December 3. 

Does Polymarket pose any real danger? 

Polymarket’s ability to analyze events and accurately present wager markets makes it stand out. However, many have expressed reservations about how it does it. 

For example, Chainlink’s Zach Rynes cited concerns about the potential for prediction markets like Polymarket to, in the future, incentivize harmful actions, particularly regarding assassination bets and market manipulation.

Vitalik Buterin, a respected voice in the crypto community, defended Polymarket when it faced criticism for its markets based on conflicts in the Middle East. He claimed that he draws the line when a market acts as a primary incentive for harmful actions, promoting insider trading.

Rynes is unconvinced and has highlighted that any prediction market on influenceable events could incentivize harmful actions if there is enough liquidity available.

“Even if it wasn’t the original intention, highly liquid markets could subsidize war,” Rynes argued. “Prediction markets aren’t passive observers—they can influence outcomes when they scale.”

In response, Buterin proposed introducing soft caps on market sizes for platforms like Polymarket. His suggestion was to implement a fee structure that increases as market size approaches the cap, with all proceeds used to support socially beneficial markets with low organic volume.

The Ethereum co-founder Vitalik Buterin has also defended the inclusion of a Hezbollah betting section on Polymarket. In a post from October 1 on X, Buterin highlighted how many individuals, including elites, make harmful and inaccurate predictions about conflicts on platforms like Twitter.

He believes knowing whether people with a financial stake believe an event has a 2% or 50% chance of happening offers valuable insight that can help maintain rationality in the face of misinformation.

“It’s not about ‘[making] money from bad stuff happening,’” he said. “It’s about creating an environment where speech has consequences (so both unjustified fearmongering and unjustified complacency are punished), without relying on governmental or corporate censors.”

Polymarket’s Hezbollah-related markets allowed users to bet on significantly consequential real-life events like ceasefires and US military intervention in the Israel-Lebanon crisis. These markets have drawn in over $7 million in trading volume.

Many are now asking about the ethical implications of Polymarket allowing people to bet on such events. 

The answer is very subjective. However, one thing is clear: Polymarket has changed how the world approaches events with global implications. 

Will it grow powerful enough to encourage insider trading and manipulation? Only time will tell. But given the human propensity to corrupt things, it is very likely Polymarket will be used for nefarious purposes — they just have to figure it out first. 

For now, real-life consequences aside, Polymarket has once again shown its ability to finger the pulse of events correctly, no matter how trivial. If South Korea’s president ends up on the impeachment block, it would be another notch on Polymarket’s hat — calling the impeachment way earlier than most. 

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