Kalshi has announced the launch of tokenized versions of its betting contracts on the Solana blockchain, exclusive to CNBC on Monday. This development highlights the prediction market company's strategy to attract cryptocurrency enthusiasts, similar to those propelling its competitor, Polymarket, with significant digital asset investments.
Tokenization involves creating a digital counterpart of a traditional financial asset, like stocks or bonds, allowing it to be traded on a blockchain such as Solana. This innovation offers users increased anonymity by trading these tokens rather than standard contracts, aligning Kalshi with Polymarket's blockchain trading approach.
Kalshi confirmed that support for these tokenized wagers tied to its event contracts is now available on Solana. Collaborating with decentralized finance protocols DFlow and Jupiter, they aim to connect Kalshi's off-chain orderbook to Solana's liquidity pools, serving institutional clients effectively.
The initiative is part of Kalshi's aggressive push to engage crypto investors amid surging demand for event contracts. Prediction markets have seen trading volumes of almost $28 billion by October this year, with a record weekly high of $2.3 billion in late October, according to Crypto.com research.
John Wang, Kalshi's head of crypto, emphasized the significance of accessing the $3 trillion digital asset market to enhance their liquidity and scale. He stated, "There's a lot of power users in crypto. This is about tapping into the billions of dollars of liquidity that crypto has, and then also enabling developers to build third-party front ends that utilize Kalshi's liquidity."
Established in 2018, Kalshi became the first to offer federally regulated event contracts on U.S. congressional races by late 2024, following a lengthy legal battle with the Commodity Futures Trading Commission. It has since expanded its platform to host around 3,500 markets and received a significant funding boost of over $300 million from investors like Andreessen Horowitz and Sequoia Capital.
Despite the company's first-mover advantage, especially as Polymarket reenters the U.S. market, Kalshi recognizes the need for continuous growth and liquidity to maintain competitiveness. Crypto-native traders are especially active in prediction markets, often trading more frequently than their non-crypto counterparts, which could significantly enhance market liquidity.
Wang elaborated, "If you have a market with no liquidity, then you don't really have a market. People can't really trade size or get the prices that they want." By leveraging substantial crypto liquidity, Kalshi aims to provide competitive and accurate market pricing.