A Kalsi billboard displays predictions for the New York City mayoral election, Monday, October 27, 2024, in New York City, USA.
Michael Nagle | Bloomberg | Getty Images
Kalsi bettors can now buy and sell tokenized versions of their stakes on Solana, the company exclusively told CNBC on Monday. This is the latest sign that the prediction market firm is stepping up efforts to court the same crypto holders who have funneled billions of dollars in digital assets to rival Polymarket.
Tokenization refers to creating digital versions of real-world financial assets such as stocks, bonds, and Treasury bills. The resulting tokens can be held or traded like regular assets and reside on a distributed ledger called a blockchain, such as Solana or Bitcoin.
The tokenized version of the contract functions similarly to the regular contracts found previously on Kalshi’s platform. However, trading tokens rather than actual contracts increases user anonymity. This makes Kalshi on par with Polymarket, where users can trade directly on-chain.
Tokenized betting support related to Kalsi’s event contracts is livestreamed on Solana, Kalsi told CNBC. Decentralized finance protocols DFlow and Jupiter will serve as institutional clients, bridging exchanges’ off-chain order books and Solana’s liquidity.
As demand for event contracts soars, Kalsi is stepping up its efforts to reach out to forensic virtual currency holders. According to data cited by Crypto.com’s research arm, prediction market trading volume reached a combined nearly $28 billion through October this year, hitting a weekly high of $2.3 billion in the week of October 20th.
By tapping into the $3 trillion digital asset market, Kalsi will gain the liquidity needed to expand its offering at a time when investors’ appetite for prediction markets is rapidly increasing, John Wang, the company’s head of cryptocurrencies, told CNBC.
“Cryptocurrency has a lot of power users,” Wang said. “This is aimed at leveraging the billions of dollars of liquidity held in cryptocurrencies and allowing developers to build third-party front ends that leverage Kalsi liquidity.”
Founded in 2018, Karsi became the first exchange to launch federally regulated event contracts for U.S. congressional elections for U.S. traders in late 2024, shortly after winning a multi-year legal battle with the Commodity Futures Trading Commission.
Since then, Kalsi has added more event deals to its platform and operates about 3,500 markets, according to company representatives. Last fall, it raised more than $300 million at a $5 billion valuation in a funding round backed by crypto heavyweight Andreessen Horowitz and Sequoia Capital, and has expanded its footprint to more than 140 countries.
However, this first-mover advantage may not be enough to keep the platform competitive, especially since Polymarket, which has reopened in US Kalsi, will need to continue to grow to outpace its competitors, which will require sufficient liquidity, which a fund of crypto-native traders could provide, Wang said.
Digital asset holders tend to be particularly active in prediction markets and have higher trading volumes compared to non-crypto asset holders, so their presence on the platform is likely to meaningfully increase the liquidity of the overall Karshi market, the executive said. And by leveraging its vast liquidity, Kalsi can ensure competitive and accurate pricing across its platforms, he added.
“If you have an illiquid market, you actually don’t have a market,” Wang said. “People can’t really exchange sizes or get the price they want.”
