The Mainstreaming of Prediction Markets: How Polymarket and Kalshi Proved Their Value

In the early hours of October 10, 2025, the odds for Venezuelan opposition leader Maria Corina Machado winning the Nobel Peace Prize surged from 3.75% to 73% on Polymarket within just two hours.

When Machado was indeed announced as the winner later that morning, it confirmed the signal the market had sent hours earlier. This unusually prescient movement prompted Norwegian officials to open an investigation into potential insider trading.

A trader known as “6741” began heavy buying roughly 12 hours before the announcement, when Machado’s odds were still around 5%, reportedly netting profits exceeding $50,000. The Nobel Committee’s secretary later stated that the information leak was “highly likely” to involve espionage.

Prediction markets have recently exploded in popularity, and this incident has further drawn public attention to their growing influence.

Prediction markets have recently exploded in popularity, and this incident has further drawn public attention to their growing influence. In October, the cumulative monthly volume of Polymarket and Kalshi exceeded $30 billion.

Both platforms have recently announced new funding rounds: Polymarket raised $2 billion from ICE, reaching a valuation of $9 billion, while Kalshi secured $300 million in funding, valuing it at $5 billion.

These developments underscore how prediction markets are evolving from niche experiments into a mainstream sector within crypto. They are emerging as one of the industry’s most compelling new narratives, with contracts now covering virtually everything from presidential elections and NYC mayoral races to weather patterns and Federal Reserve rate decisions.

The Logic of Prediction Markets

How Prediction Markets Work

Prediction markets are exchange-traded markets where participants buy and sell contracts whose payoffs depend on the outcomes of uncertain future events.

The key mechanism operates through a continuous double auction system where traders can buy contracts betting on specific outcomes, with prices reflecting collective probability assessments.

How They Differ from Gambling Platforms

While both involve wagering on uncertain outcomes, prediction markets serve as information discovery tools beyond mere entertainment and profit-seeking purposes.

From a regulatory perspective, prediction markets involve contracts based on economic events and public policy outcomes, which the CFTC recognizes as having legitimate economic purposes beyond simple gambling.

Additionally, prediction markets typically feature longer time horizons, more sophisticated participants, and direct economic relevance to hedging and decision-making.

Expanding Beyond Finance: Diversity of Prediction Markets

Beyond finance and politics, prediction markets now extend into a wide range of cultural and entertainment domains, illustrating their inclusiveness and adaptive design.

These markets demonstrate remarkable versatility in the types of events they can cover, attracting diverse participants and creating vibrant trading ecosystems across various domains.

Polymarket has over 259,000 monthly active users, representing a 43% yoy increase, while the platform offers more than 60 markets spanning politics, sports, and entertainment.

• In esports and gaming, the intersection of prediction markets with competitive gaming has created substantial trading volumes.

    For instance, the League of Legends match between T1 and Invictus Gaming (BO5) has generated over $1 million in trading volume, and Polymarket supports real-time Twitch streaming, allowing prediction traders to stay updated on recent match developments and trading activity, which also serves as a feature to enhance user engagement.

  

• In pop culture and entertainment, markets have expanded into celebrity-related events, creating significant engagement.

   The question “Will Taylor Swift be pregnant in 2025?” has already accumulated $1.5 million in trading volume on Polymarket. These markets demonstrate how prediction platforms capture public interest in cultural phenomena while still maintaining an information aggregation function.

   Traders incorporate various signals from social media, public appearances, and relationship timelines into their trading decisions, and they can also leave comments on specific contracts, which may provide valuable signals for later participants or, in some cases, misleading information, illustrating the social dimension of information flow within these markets.

Key Prediction Market Platforms

POLYMARKET

As a long-standing leader in the prediction market space, Polymarket performed exceptionally well during the 2024 U.S. presidential election. The platform recorded $11 billion in trading volume throughout 2024, with 242,000 active traders. During the 2024 presidential election alone, Polymarket generated $3.2 billion in trading volume.

Although Polymarket has not yet issued a project token, after securing $2 billion in funding, on October 9, Polymarket founder Shayne Coplan posted a semi-cryptic message on social media, hinting that the prediction platform might launch a native POLY token and suggesting that it has the potential to become one of the largest cryptocurrencies by market capitalization.

Kalshi

As a rising star, Kalshi has successfully surpassed Polymarket to become the new dominant player in the prediction market space. In September 2025, Kalshi captured a peak market share of 60%, a significant reversal from the early-year dominance of Polymarket.

Notably, Kalshi has partnered with Pyth Network, becoming the latest data provider for Pyth. Through Pyth, Kalshi’s prediction market data is distributed to over 100 blockchains, covering live markets such as the New York City mayoral election, F1 annual driver championship, MLB World Series champion, and the number of interest rate cuts in 2025.

AUGUR (REP)

Augur is one of the earliest decentralized prediction market protocols. Its token, REP, currently has a market capitalization of approximately $14 million.

The current price is around $1.3, while the all-time low was $0.2362 in November 2024. From $0.2362 to $1.23, REP has gained roughly 465%, demonstrating strong recovery momentum.

As an early entrant in the prediction market sector, Augur benefits from technical experience and brand recognition.

GNOSIS (GNO)

Gnosis is not only a prediction market infrastructure project but also a full Web3 ecosystem. Gnosis Chain is the most decentralized Ethereum sidechain, with over 200,000 validators, using xDAI as gas fees.

GNO is the core token of the Gnosis ecosystem, used for staking on the Gnosis Beacon Chain and as the governance token of GnosisDAO.

GNO’s price showed notable short-term volatility: on September 27, 2025, it was priced at $128, and by October 7, just ten days later, it had risen to $158, a surge of approximately 23%.

However, following the market crash on October 11, its price dropped back to around $130. Considering Gnosis’s role as a prediction market infrastructure project, its token may potentially spark in value in the future as the overall prediction market sector grows.

The Future of Information Markets

Prediction markets are becoming an increasingly vital component of the financial ecosystem. By aggregating dispersed information, they provide real-time probability assessments, offering investors and decision-makers valuable insights beyond traditional polling. This "wisdom of crowds" mechanism demonstrates unique value in areas such as political events and economic indicator forecasting.

Traditional financial institutions have taken notice of this trend. ICE's $2 billion investment marks traditional finance giants' formal entry into prediction markets. Prediction markets are evolving from simple betting tools into financial instruments for measuring probability and forecasting risk. Kalshi's partnership with Pyth Network, distributing prediction market data across 100+ blockchains, demonstrates deep integration with traditional financial infrastructure. As regulatory frameworks become clearer and institutional investors participate more actively, prediction markets are poised to become mainstream financial tools.

For investors considering participation in this emerging field, several core metrics deserve attention when evaluating prediction market platforms.

• Platform trading volume and active user count reflect market liquidity and vitality;

• Historical prediction accuracy demonstrates market effectiveness;

• Regulatory compliance status determines long-term development prospects;

• Token economics sustainability relates to the investment's long-term value.

Together, these metrics form the fundamental framework for assessing prediction market investment opportunities.

Disclaimer: This article is for informational purposes only and does not constitute investment advice; cryptocurrency investments carry high risks, please invest cautiously.

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