Galaxy in Talks to Provide Liquidity for Polymarket and Kalshi as Trading Firms Jump Into Prediction Markets

Key Takeaways

• Galaxy Digital is successful talks to enactment arsenic a marketplace shaper for Polymarket and Kalshi.

• The booming prediction marketplace assemblage presents a important arbitrage opportunity.

• Regulatory approvals person eased the way for organization trading desks to supply liquidity.

Galaxy Digital is reportedly successful discussions with Polymarket and Kalshi astir becoming a liquidity supplier connected their platforms.

The determination comes arsenic a increasing fig of trading firms dip their toes into prediction markets amid rising adoption and declining compliance risk.

In comments reported by Bloomberg, Galaxy Digital CEO Mike Novogratz said the steadfast is successful talks to enactment arsenic a marketplace shaper for Polymarket and Kalshi.

“We’re doing immoderate small-scale experimenting with market-making connected prediction markets, but I deliberation you’ll yet spot america providing broader liquidity,” helium said.

As it does for planetary crypto exchanges, Galaxy would present marketplace extent by stepping up to bargain and merchantability prediction contracts.

In a assemblage characterized by choky liquidity and bladed spreads, the beingness of large, organization marketplace makers could little costs for users.

Moreover, if companies similar Galaxy plug into some Polymarket and Kalshi—the 2 astir fashionable platforms successful the space—they could supply much-needed arbitrage.

Currently, a deficiency of arbitrageurs successful the prediction marketplace abstraction contributes to important terms divergence.

For instance, astatine the clip of writing, contracts for Kevin Hasset to go Chair of the Federal Reserve were trading astatine $0.35 connected Kalshi and $0.14 connected Polymarket.

The concern recalls the cryptocurrency marketplace anterior to 2016, earlier nonrecreational trading firms established the infrastructure that drives modern liquidity provisioning.

Back then, Jump Trading, Alameda Research, and Susquehanna International were among the archetypal specialized crypto marketplace makers. Today, immoderate of those aforesaid firms are eying akin opportunities successful prediction markets.

In 2024, Kalshi onboarded Susquehana arsenic its “first large organization marketplace maker.” And earlier this month, Bloomberg reported that Jump Trading had started providing liquidity for the platform.

Announcing the firm’s concern with Susquehana, Kalshi laminitis Tarek Mansour argued that organization marketplace making was lone imaginable acknowledgment to the platform’s regulatory support from the Commodity Futures Trading Commission (CFTC).

The concern contiguous marks a melodramatic turnaround since 2022, erstwhile the CFTC ordered Polymarket to retreat from the U.S.