KuCoin Ventures has published a new strategic analysis of the fast-growing prediction markets sector, which now records more than $2 billion in weekly trading volume. While much of the public focus has centered on platforms like Polymarket and Kalshi, the report contends that the true investment opportunity lies in the foundational infrastructure supporting the industry, not in platform competition.
Prediction Markets: From Speculation to Financial Infrastructure
The report outlines how prediction markets are transitioning from speculative applications to forming part of the broader financial infrastructure. It highlights the rise of major platforms: Polymarket, recently backed by Intercontinental Exchange (ICE) with a $2 billion investment at an $8 billion valuation, and Kalshi, now valued at $5 billion. However, the report also underscores the structural challenges these platforms reveal, including fragmented liquidity, unresolved oracle disputes, and unclear regulatory frameworks.
Polymarket alone launched over 35,500 markets in October, the platform’s highest monthly figure to date, indicating accelerating user engagement. Despite this growth, specific incidents such as the “Zelenskyy Suit” market and Venezuela’s disputed election outcome have drawn attention to ongoing issues in market governance and resolution mechanisms. Additionally, liquidity remains concentrated in a narrow set of high-profile markets, leaving a large number of smaller markets unstable and underused.
The Importance of Foundational Infrastructure
Rather than competing to build the next dominant platform, the report argues that sustainable growth depends on robust infrastructure development. This includes advanced oracle solutions, liquidity protocols tailored for long-tail markets, tools to streamline regulatory compliance across jurisdictions, and AI-driven systems to support forecasting and market interpretation.
“The prediction market sector has crossed into multi-billion-dollar territory, but its long-term viability hinges on solving governance, liquidity, and compliance at the infrastructure level,” the report notes.
KuCoin Ventures emphasizes that these infrastructure components, often overlooked in mainstream narratives, are likely to be the deciding factors in whether prediction markets evolve into a mainstream financial instrument or remain a niche innovation.
Report Details and Investment Thesis
The report, authored by KuCoin Ventures analysts Claude, Mia, and Oasis, is available in Bahasa Indonesia. It aligns with the firm’s broader thesis of investing in research-driven, early-stage projects in Web3, AI, and financial infrastructure.