Crypto prediction markets have transformed from niche experiments into mainstream trading platforms, with Polymarket and Kalshi now dominating this dynamic sector. Their rise follows years of technological innovation, regulatory navigation, and shifting product strategies that have shaped the landscape.
Recent investments have spotlighted this transition. The Intercontinental Exchange (ICE) has committed up to $2 billion to Polymarket, while Kalshi secured $300 million in funding. Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, told Reuters that ICE’s interest extends beyond contract clearing; the company aims to monetize the data generated by these markets, using odds as sentiment indicators that integrate with other financial metrics.
Before Polymarket and Kalshi’s ascendancy, the prediction market space featured prominent projects like Augur and Gnosis, each taking distinct approaches to the decentralized prediction market concept.
Augur, launched in 2018 following its 2014 founding by Joey Krug, Jack Peterson, and Jeremy Gardner, was among the earliest decentralized platforms with a reputation token (REP) and a blockchain oracle system to report event outcomes. Although promising in theory, Augur struggled with technical challenges including unreliable third-party node services, issues syncing with the Ethereum blockchain, and prohibitive gas fees. According to Alchemy, a blockchain infrastructure provider supporting Augur, these initial problems delayed the platform’s growth and stability for several months.
Mike Garland, Alchemy’s head of product, highlighted that Augur and Gnosis “pioneered crypto-based prediction markets during Ethereum’s early days, confronting scalability, transaction cost, and user experience hurdles that reflected the nascent state of the network.” Interestingly, Garland noted that Polymarket now also utilizes Alchemy’s infrastructure, benefiting from lessons learned in earlier projects.
Gnosis, founded in 2015, took a different route by prioritizing foundational technology over launching a consumer prediction market. Its Conditional Tokens Framework allowed for the creation of markets and the conversion of event outcomes into tradable tokens. By mid-2020, Gnosis had shifted away from direct consumer platforms to focus on the underlying tools. The decentralized collective DXdao later used this technology to build Omen, a user-facing prediction market platform.
This framework indirectly contributed to the success of newer entrants such as Polymarket, which runs event outcome tokens as ERC-1155 tokens — a standard linked to Gnosis’s pioneering developments.
The early days of prediction markets were marked by ambitious launches and growing pains. Users of Augur encountered a steep learning curve, including the need to download a full Ethereum node desktop app to access the platform, which was time-consuming and complex. While Gnosis’s approach was more developer-focused, enabling community initiatives, both projects laid critical groundwork.
Today, Polymarket and Kalshi operate with more mature technology and more significant investor backing, representing a mainstream evolution in crypto prediction markets. Their progress reflects the culmination of years of experimentation and adaptation within the ecosystem, positioning prediction markets as a valuable tool for financial sentiment analysis and speculative trading in the blockchain era.
