The "prediction market" in the wave of financing: Why are crypto venture capitals betting on this track that may be larger than the stock market?

In 2025, the prediction market is迎來 unprecedented golden moments. From Polymarket, Kalshi to the startup The Clearing Company, waves of high financing are flooding into this once niche field. Data shows that this year, 11 transactions have raised over $216 million, far exceeding the $80 million in 2024 and $60 million in 2021.

Behind this influx of capital, there are not only the driving forces of the macro environment and regulatory breakthroughs, but also the “tipping point effect” brought about by more than a decade of infrastructure accumulation.

Capital Influx: From the Margins to the Spotlight

The Clearing Company: Founded by former employees of Polymarket and Kalshi, raised $15 million in seed round.

Kalshi: In June, it secured $185 million in a round led by Paradigm, achieving a valuation of $2 billion, and is collaborating with Robinhood to develop a prediction market for sports.

Polymarket: Raised over $200 million, led by Peter Thiel's Founders Fund, and acquired the derivatives exchange QCEX for $112 million to return to the U.S. market.

At the same time, giants like X (Twitter) are also laying out prediction markets, indicating that this field has transitioned from on-chain experimentation to the mainstream stage.

Why Now? Four Key Drivers

Demand Persistence: After the 2024 U.S. election, trading volume did not decline, but rather shifted towards sports, economic, and cultural events.

Cultural visibility: Collaborating with X, media citations, making the prediction market a source of information for the political and business circles as well as the public.

Regulatory Breakthrough: CFTC withdraws appeal against Kalshi, effectively allowing election contracts; approves Polymarket's acquisition of QCEX to return to the US.

Mature infrastructure: smart contracts, secure oracles, stablecoins, and regulatory frameworks have been refined over more than a decade.

Why are only Polymarket and Kalshi breaking through?

Liquidity moat: Kalshi took five years to establish deep liquidity before the market warmed up; Polymarket, on the other hand, expanded trading volume through cash rewards and its market-making division.

Brand and mind share: Polymarket has almost become synonymous with “prediction market”; Kalshi relies on institutional credibility and a compliant image.

Survival resilience: Persisting in operations under regulatory pressure and during downturns, turning first-mover advantage into long-term dominance.

Future Growth Path: May Compete with the Stock Market

Institutional adoption: Hedge funds and large asset management firms can use prediction markets as direct hedging tools.

Cross-industry integration: Sports entertainment platforms such as FanDuel and DraftKings are expected to enter, bringing a market of hundreds of billions of dollars in incremental value.

Product Innovation: User-Generated Market, On-Chain Liquidity, Trust-Minimized Settlement Mechanism

Grand Vision: The “futarchy” model proposed by economist Robin Hanson—using prediction markets to assist in policy-making.

Risks and Challenges

Weak liquidity: small platforms find it difficult to break through the “which came first, the chicken or the egg” dilemma.

Objectivity of events: Some contracts rely on prediction markets or arbitrators, which may lead to disputes.

Reputation risk: Involvement in sensitive events such as war, terrorism, etc. may trigger regulatory crackdowns.

Integrity issues: insider trading, toxic capital flows, and platforms lacking KYC can harm user experience.

Conclusion

The investment value of prediction markets comes from the cumulative effects of the persistence of demand, cultural penetration, regulatory relaxation, and the maturity of infrastructure. Although liquidity and compliance challenges still exist, with the entry of institutional funds and cross-industry platforms, this sector may grow from a “niche experiment” to a global trading infrastructure that can stand alongside the stock market.