Kalshi, the prediction market firm, now allows its users to trade tokenized versions of their bets on Solana, as shared exclusively with CNBC on Monday. This move marks a significant step in Kalshi’s strategy to attract cryptocurrency enthusiasts, who have already invested substantial sums into competing platforms like Polymarket.
Tokenization involves creating digital equivalents of tangible financial assets, such as stocks or bonds, which are then represented as tokens on a decentralized blockchain platform like Solana or Bitcoin. These tokens function as the digital counterparts, maintaining the integrity and functionality of traditional contracts while allowing for anonymous trading, aligning Kalshi closer with Polymarket's on-chain trading capabilities.
Currently active on Solana, this tokenized trading feature will involve decentralized finance protocols like DFlow and Jupiter, which will act as institutional clients by connecting Kalshi's off-chain orderbook with Solana's existing liquidity.
With event contract demand surging, Kalshi targets the growing digital asset market, valued at $3 trillion, to enhance its liquidity and expand its market offerings. "A lot of power users are in crypto," stated John Wang, Kalshi's head of crypto. "Tapping into the crypto liquidity lets us develop third-party applications that leverage Kalshi's liquidity."
Kalshi, founded in 2018, pioneered federally regulated event contracts in U.S. congressional races by 2024 after resolving regulatory challenges with the Commodity Futures Trading Commission. Since then, the platform has grown, hosting around 3,500 markets and expanding globally, raising over $300 million, led by Andreessen Horowitz and Sequoia Capital, at a $5 billion valuation. Yet, maintaining their competitive edge, particularly against Polymarket's U.S. relaunch, will necessitate further platform expansion and liquidity.
Crypto investors, known for their active trading in prediction markets, could significantly enhance liquidity across Kalshi's offerings, said Wang. "With markets lacking in liquidity, you don't have a feasible trading scenario," he explained. By integrating the substantial liquidity of cryptocurrency markets, Kalshi aims to ensure robust and competitive pricing across its platform.