Open Interest

Open interest represents the total dollar value or contract count of all active positions in a market — contracts that have been bought or sold but not yet resolved. High open interest indicates significant market participation and a strong collective financial stake in the outcome. For prediction market observers, open interest is often a better liquidity indicator than trading volume alone, as volume can spike briefly while open interest reflects sustained engagement.

In major Polymarket election markets during 2024, open interest reached over $500 million, reflecting enormous financial bets on the US presidential race. This level of open interest attracted media attention and contributed to discussions about prediction markets' influence on public perception and political narratives.

Open interest tends to peak shortly before event resolution and then collapses to zero after the outcome is determined and contracts settle. Tracking the trajectory of open interest over a contract's lifetime can reveal when informed participants are entering or exiting positions, potentially signaling their views on the likelihood of the event.