The economic analysis behind Polymarket's strategic decision: why abandon Polygon now

On December 22nd, Polymarket officially confirmed in its community Discord channel an announcement destined to shake the ecosystem: the leading prediction market platform intends to migrate from Polygon to its own Layer2 blockchain built on Ethereum, called POLY, thus transforming its model from a simple application to an autonomous infrastructure.

The financial statement behind independence

Polymarket’s choice to create a proprietary network is not accidental but the result of a precise economic calculation. Looking at the numbers, the platform now represents a giant in its sector: 419,309 monthly active users with a total historical count of 1,766,193; 19.63 million transactions in the month in question out of a total of 115 million; a monthly transaction volume of $1.538 billion against the overall $14.3 billion.

These data reveal the true financial statement of the relationship between Polymarket and Polygon. The funds locked on the platform currently amount to around $326 million, equivalent to about a quarter of the total $1.19 billion locked on Polygon. Simultaneously, transactions related to Polymarket consume approximately 23% of the network’s total gas— a significant share that underscores the structural impact of the application on the ecosystem.

From technical limitations to concentrated economic value

To understand the motivation behind this migration, one must consider both technical constraints and economic opportunities. Polygon, while a solid starting point, has shown significant stability issues in recent months, culminating in malfunction on December 18th. At the same time, the related ecosystem remains relatively fragile compared to the needs of a rapidly growing platform.

Building its own infrastructure allows Polymarket to fully control the entire chain of economic value generated by its activity. It is not simply a technical migration to more stable operational conditions but a strategic decision that enables the concentration of all ancillary services, incentives, liquidity impacts—such as the revitalization of stablecoin use (all Polymarket transactions use USDC)—within a proprietary ecosystem.

Furthermore, loyal users of the platform could be naturally incentivized to use other DeFi services built on Layer2 POLY, thus multiplying the overall network value and the opportunities for Polymarket to capture value.

The perfect timing: the TGE as a catalyst

The timing of the decision is not accidental. Polymarket is about to launch its governance token (TGE), a critical moment where the financial statement of the proprietary structure becomes decisive. Once the token is issued, modifying the underlying infrastructure would entail enormously higher costs and complexities, potentially destabilizing governance arrangements and incentive models.

By launching POLY simultaneously with the creation of the proprietary Layer2, Polymarket shifts its market narrative from “successful application” to “expanding ecosystem and infrastructure,” a difference that significantly impacts the overall valuation of the project.

The fundamental lesson: value flows toward independence

This migration in miniature represents a broader transformation in the crypto sector. When applications reach a scale that generates significant traffic, users, and economic activity, maintaining dependence on external infrastructure becomes an economic waste. Underlying networks that do not offer sufficient additional advantages are naturally at risk of losing their flagship applications.

For Polymarket, the financial statement is unequivocal: controlling the infrastructure means controlling most of the value produced by its platform. It is not a matter of technological whimsy but pure economic rationality.