The crypto derivatives exchange DYdX has jumped into the prediction market scene. This move targets investors who are eager to take on risk. It also highlights the growing influence of Polymarket in this space.

Right now, crypto prediction markets are trending. Everyone wants in on the action. DYdX, one of the largest decentralized derivatives exchanges, is stepping up with a unique offer. They allow investors to leverage bets on the winner of the 2024 presidential election by as much as 20 times.

This new feature launched late Thursday night. It combines two high-risk activities: making predictions and trading with borrowed funds. Plus, DYdX uses open-source data from Polymarket to support its offering.

Although DYdX is a bit late to the game, several other crypto-powered prediction markets have already launched this year. They aim to cater to more sophisticated traders.

With just $1,000, traders can take a position worth $20,000, betting on Trump to win the election. David Gogel, head of strategy at the dYdX Foundation, believes this is a reasonable cap for a new market. He explained, “We want to give people the tools they need to trade, but we also want to protect the overall solvency of the protocol.”

DYdX’s entry into the prediction market signals new revenue opportunities for crypto exchanges, thanks to Polymarket. Backed by billionaire investor Peter Thiel, Polymarket has over $1.7 billion in bets on who will win on November 5.

Polymarket is gaining mainstream attention, even appearing on Bloomberg’s Terminal platform for professional traders. They recently brought on polling expert Nate Silver as an advisor. The platform now boasts over 100,000 users across various markets, including sports and weather events.

Given Polymarket’s liquidity, DYdX uses it as a data provider to ensure accurate pricing in its election market. However, this reliance on Polymarket data does come with risks. Gogel noted, “There’s a heavy reliance on Polymarket data compared to a large token like Bitcoin, which is listed on multiple exchanges.”

Other projects, like Drift Labs on Solana and D8X, are also entering the prediction market space. Reports indicate that Coinbase Ventures has invested in several prediction markets built on the Base blockchain.

Despite these developments, Gogel sees the new election market on DYdX as more of a tool for advanced traders than a competitor to Polymarket.

The TRUMPWIN offering is a perpetual futures contract. It allows traders to bet on whether the Republican nominee and former president will win on November 5. Perpetual futures are contracts that never expire, letting traders speculate on price movements. This type of trading isn’t currently available on Polymarket.

Gogel explained, “With a perpetual exchange like DYdX, you can take a more tailored view of the market.” He added, “Even on Polymarket today, people are trying to hedge their risks, but a spot-only exchange doesn’t allow for that nuanced view.”

TRUMPWIN is an experiment. Gogel believes trading activity will determine whether DYdX launches additional markets after the election. The time after the November vote will be crucial for this niche.

With over 75% of Polymarket’s volumes occurring around the election, the question of whether prediction markets will remain popular after the election is significant. Gogel stated, “Do I think launching prediction markets or a TRUMPWIN market will get as much liquidity as Bitcoin or Ethereum? Probably not. But could it be a top 50 market on DYdX in terms of volume over a few weeks? Probably.”