Kalshi, a prediction market company, has introduced a new feature allowing users to buy and sell tokenized versions of their wagers on the Solana blockchain, as reported exclusively by CNBC on Monday. This move reflects Kalshi's strategic effort to attract cryptocurrency holders, paralleling its competition with Polymarket, a rival platform known for its digital asset-backed markets.
Tokenization involves creating digital counterparts for real-world financial assets like stocks or bonds, which are then transacted as tokens on a blockchain such as Solana or Bitcoin. These tokenized contracts function similarly to traditional ones available on Kalshi, but trading them offers users enhanced anonymity by leveraging blockchain technology. This mechanism aligns with Polymarket’s on-chain trading model, positioning Kalshi as a formidable competitor.
Support for these tokenized wagers is now active on Solana, with decentralized finance protocols DFlow and Jupiter acting as primary institutional clients to integrate Kalshi’s off-chain order book with Solana’s liquidity pool. This initiative comes as Kalshi aims to capitalize on the increasing demand for event contracts, reflecting a broader trend in prediction markets that have achieved over $28 billion in trading volume to date in 2023, reaching a record high in late October.
According to John Wang, Kalshi's head of crypto, the move taps into the $3 trillion digital asset market, ensuring the platform’s liquidity to support its expanding user base and contract offerings. “There's a lot of power users in crypto,” Wang noted, highlighting the potential of crypto funds to sustain Kalshi’s ambitious growth plans.
Established in 2018, Kalshi made waves as the first exchange to offer federally regulated event contracts, subsequently building a diverse array of markets. Its successful $300 million fundraising last year, with backing from prominent investors like Andreessen Horowitz and Sequoia Capital, underscores its rapid expansion and significant market valuation.
With Polymarket's anticipated re-entry into the U.S. market, Kalshi faces stiff competition. However, by drawing on crypto-native traders who tend to exhibit higher trading volumes, Kalshi aims to boost liquidity and maintain its competitive pricing, essential for sustaining its market leadership. “If you have a market with no liquidity, then you don't really have a market,” Wang emphasized, pointing to the crucial role of robust trading environments for market success.