Prediction market open interest surpasses $1 billion for first time

Open interest for the major prediction markets broke above $1B for the first time. Increased market liquidity tracks a growing number of users, as well as new contenders to compete with Polymarket and Kalshi.

Open interest on all prediction markets climbed above $1B for the first time. Polymarket remained the leader based on some activity metrics, but overall prediction market usage also shows the effect of newer platforms.

Open interest on prediction platforms broke above $1B, showing a higher baseline of activity compared to the brief 2024 peak. | Source: DeFi Llama

Based on DeFi Llama data, open interest rose to $1.066B, with $564M in value locked into trading pairs. During the recent expansion of prediction markets, open interest has remained at a higher baseline compared to the brief spike in 2024.

Prediction markets are still carrying slimmer liquidity even compared to exchanges. However, open interest is still growing exponentially, potentially leading the sector to compete with major decentralized exchanges.

In the past three months, prediction market growth accelerated, boosted by an inflow of new wallets and more diverse markets.

Prediction markets prepare for Super Bowl season

In the short term, prediction markets may be driven by an inflow of bets on the Super Bowl outcomes. The winter Olympics are also producing high-volume pairs, with up to $4M in predictions on medals.

Current events and politics remain the leading categories on Polymarket. Some of the $BTC trading has transferred to a short-term prediction pair on the 15-minute $BTC price.

The mix of sports and current events remains different depending on the platform. Kalshi is still the leader for sports predictions, while Polymarket relies on diverse current events and niche bets.

Almost all Kalshi volumes are concentrated on sports, and the market starts to resemble regular sports betting platforms, while Polymarket retains a wider list of categories, and is the only place for predictions specifically linked to Donald Trump and his statements.

Can predictions replace crypto trading?

Prediction markets are yet to achieve wide adoption, as there are still regulatory obstacles. Markets also differ in their internal appeal. While Polymarket and Kalshi report high transaction volumes, their competitor, Opinion, shows a much lower level of transactions.

For Opinion, while notional volumes remain high, transactions point to a smaller number of wallets engaging with predictions. Most users are still engaging with Polymarket, though Kalshi and Opinion report high volumes or peak transactions.

Most users are still concentrated on Polymarket, despite the high volumes and open interest reported on competitive platforms. | Source: Dune Analytics

Prediction markets are still replacing some forms of crypto speculation, especially for short-term prediction pairs. The main appeal of prediction markets is the lower possibility of manipulation.

Polymarket launched as a crypto insider narrative, but all platforms are battling for mainstream appeal. Most platforms are looking for fiat rails, or use regulated stablecoins like USDC.