Compiled by: Ken, Chaincatcher
Prediction markets have leaped from a niche field to a sector with a scale exceeding $600 million. What are the development trends for the next phase?
Giants are entering the arena: CME Group plans to launch sports markets, Coinbase is launching prediction markets, Robinhood acquired MIAXdx to offer in-house markets, thereby reducing reliance on Kalshi. Meanwhile, Polymarket and Kalshi are aggressively expanding to compete for market share.
Polymarket's Strategy: Build a crypto-native foundation with a CFTC-compliant architecture to aggregate the largest liquidity.
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Return to the US Market: Through its acquired licensed exchange, it is about to regain CFTC approval and go live.
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Web2 Expansion: Reaching entirely new audiences through partnerships with UFC, NFL, and Yahoo Finance.
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On-Chain Moat: Consolidating dominance and improving user retention through potential airdrop expectations and wallet integrations.
Kalshi's Strategy: Leverage compliance moat and order book liquidity to expand into global and on-chain markets.
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Global Expansion: With $300 million in funding, Kalshi is expanding to 140 countries, challenging Polymarket's international advantage.
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On-Chain Integration: Kalshi chooses not to compete directly with DeFi but instead provides liquidity to Jupiter and gains additional volume through high-traffic on-chain hubs like Phantom.
Kingmaker Effect
Layer 1 and Layer 2 now have real economic incentives to compete for prediction market share. Ecosystem grant programs targeting prediction market projects and their trading volume are expected to emerge.
General-purpose prediction market platforms will struggle to compete with existing liquidity giants. The real opportunity lies in verticalized markets built for specific user groups.
Prediction 1: The "Perpetual-ization" of Options
Perpetual contracts simplified derivatives trading by removing expiration dates. Prediction markets can apply the same logic to options.
A market asking "Will Bitcoin close above $150,000 on June 30th?" is essentially a cash-settled binary option. There are no Greeks, no strike chains, no complex pricing models. Just a simple 0-100 probability that anyone can understand. Repackaging volatility into an easily digestible form through prediction markets will drive new demand for on-chain options.
Protocols like @Euphoria_fi are pushing this concept further with "click-to-trade" interfaces designed to feel more like gaming than operating a complex trading terminal.
Prediction 2: On-Chain Native Risk Markets
Prediction markets are poised to become core infrastructure by filling the gap for native insurance. Markets need tools to hedge DeFi risk exposures. To scale, DeFi needs native, trustless ways to规避 these risks.
Short-term (15/30 day rolling) markets like "Will stETH trade below 0.98 ETH for more than 1 hour in January?" allow users to precisely hedge specific risks.
Finding counterparties for these markets is very difficult. LPs can earn small premiums but face tail risk of being wiped out. Nonetheless, platforms that crack this nut will immediately gain favor with players who have massive sums locked in DeFi.
Prediction 3: Unbundling
The real opportunity is not to compete directly with Polymarket, but to unbundle the tech stack to serve different user types.
Professional users need tools to gain an edge and discover new opportunities in an expanding universe of markets.
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Aggregators: Unified dashboards for trading across multiple platforms. Examples: @ConvergeMarkets, @KairosTradeX, @fireplacegg terminals.
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Advanced Analytics: Risk modeling, alternative data sources, and wallet tracking. Examples: @hash_dive, @Polysights.
Financial speculation is a large market, but social娱乐 is even larger. Betting with friends is human nature,极其 natural. Today's interfaces are designed primarily for traders, not the broader mass market. An interface aimed at broad adoption should optimize for "social signaling," not just profit maximization.
The "super users" running these tools at scale may not be human. Funds managed by AI Agents will monitor data streams in real-time, discover mispriced markets, and execute arbitrage at speeds far exceeding humans. As these players enter, the easy arbitrage edges in binary markets are expected to disappear.
As the easy edges in prediction markets are arbitraged away, capital and users will shift to new mechanisms:
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Impact Markets: Price the consequence (impact) of an outcome rather than its likelihood of happening. (e.g., @lightconexyz)
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Sentiment Markets: Markets where participants predict group sentiment rather than real-world outcomes. (e.g., @meleemarkets)
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Virtual Sports: Crypto-native versions (e.g., @footballdotfun) turn player cards into tradable liquid assets.
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Futarchy: Governance decisions driven by market predictions on whether proposals will meet target metrics. (e.g., @MetaDAOProject)
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Coordination Markets: A protocol sets a goal, participants buy tokens and take action to achieve it. If the goal is met, everyone profits through yields and token appreciation. (e.g., @hyperstiti0ns)
Prediction markets are becoming more than just speculation; they are evolving into infrastructure for options, insurance, and governance.
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