Prediction Markets surpass $13 billion: the new frontier of informational finance

Predictive markets are revolutionizing the world of finance, turning opinions and knowledge into measurable economic signals. 

According to a report by Dune, only in 2025, the monthly volume exceeded 13 billion dollars, making these markets one of the fastest-growing segments in the entire financial ecosystem.

Key Points

• Monthly volume increased from less than 100 million to over 13 billion dollars in one year
• Accuracy above 90%, with Brier scores at 0.09
• Exponential growth in non-sport sectors: technology, economy, culture
• Polymarket and Kalshi dominate the scene, with the former responsible for 88% of transactions on UMA
• New use cases in institutional, corporate, crypto, and retail sectors

What Predictive Markets Are

Predictive markets are platforms that allow trading of contracts whose value depends on the outcome of future events. Each contract represents a clear and binary question, for example: “Inflation above 5% in Q3?”. If the event occurs, the contract pays $1, otherwise $0. The price at which it is traded reflects the collective probability estimated by the market.

These tools differ from bets and surveys because they incorporate economic incentives. Users do not respond solely based on opinions, but they risk capital. The result is a mechanism of “incentivized prediction,” capable of aggregating distributed information with results often superior to those obtained from statistical models or experts.

A bit of history: from papal elections to Ethereum

Predictive markets are not a recent innovation. As early as 1503, during the papal conclave, bets were placed on the election of the new Pope. In the 18th century, London coffeehouses became hubs of information exchange where people wagered on politics, maritime trade, and wars. In 19th century United States, election betting was so common that newspapers regularly published the odds.

The modern version took shape in 1988 with the Iowa Electronic Markets (IEM), which demonstrated a predictive capability superior to polls in over 70% of the surveys between 1988 and 2004. 

With the advent of blockchain, Augur was the first on-chain protocol to launch a prediction market via ICO on Ethereum in 2015. Despite the innovations, Augur suffered from high costs, complex UX, and controversies over sensitive markets.

The Explosive Growth of 2025

According to data collected by Dune and Keyrock, 2025 witnessed a surge in volumes and participation:

• Monthly volume: increased from <100 million to over 13 billion dollars
• Growth by category:
• Polymarket: volume 400% higher compared to sports
• Kalshi: politics + economics = 2.5 times the open interest in sports

These numbers confirm a structural shift: the demand is no longer just speculative but informative. The focus is on economic, electoral, and geopolitical events, reflecting a real need for tools to measure uncertainty in real-time.

Accuracy Superior to Models and Surveys

One of the strengths is the predictive accuracy. Polymarket records accuracy rates between 90% and 95%, with performance improving as liquidity increases.

The Brier score indicator, which measures the accuracy of probabilistic forecasts, stands at values around 0.09 between Kalshi and Polymarket. It is a significantly better metric compared to:

• Political polls
• Standard economic forecasts
• Weather patterns

Kalshi, in particular, has proven to be more stable compared to benchmarks like Cleveland FedNow, with volatility 4.3 times lower. 

User Behavior: Rationality and Risk Aversion

An in-depth analysis shows that traders focus on high-probability markets:

• 35% of the volumes are recorded in markets with probabilities above 80%, despite representing only 14% of the available offerings
• Markets with low probabilities (<20%) attract 31% of options but only 3% of the volume

This behavior is consistent with a rational approach to risk and a pursuit of informational efficiency.

Polymarket: the on-chain diamond in the rough

Founded on Polygon, Polymarket is a non-custodial platform that utilizes the Conditional Token Framework by Gnosis. After an initial version with AMM, in 2022 it adopted a central limit order book (CLOB) with off-chain signed orders and on-chain settlement.

Key Data:

• Volume 2024: over 6 billion dollars
• 88% of UMA transactions originate from Polymarket
• Over 106,000 assertions managed by UMA on Polymarket

The resolution of markets occurs through:

• UMA Optimistic Oracle (80% of the markets)
• Chainlink for rapid crypto events (e.g., 15 min price checks)

This architecture allows Polymarket to manage subjective markets with speed and reliability. 98% of resolutions are uncontested, and the UMA validator network has seen a +600% increase in participants between 2024 and 2025.

Kalshi: the regulated path

Kalshi, registered as a Designated Contract Market (DCM) with the CFTC, is the first regulated platform for trading event contracts. Unlike Polymarket, it operates entirely under a U.S.-based legal structure.

In 2025, it achieved a historic legal victory that allowed it to offer fully regulated electoral markets. Additionally, it forged strategic partnerships:

• NHL: rights for official data and broadcast distribution
• Jupiter: integration into prediction-as-a-service products
• Tokenization on Solana: extension of cross-chain portability

Real-world Applications: Hedging, Forecast, and Governance

Prediction markets are surpassing their speculative function to become:

• Institutional Hedging Instruments (e.g., inflation, elections, TGE)
• Business forecast: used for predictions on sales, product launches, quarterly results
• Crypto governance mechanisms: adopted by protocols to measure sentiment and community support

In DeFi, for instance, there have been cases where predictive markets anticipate user behavior on crucial votes.

The Four Drivers of Future Growth

1. Liquidity: incentivization through market maker program (e.g., USDC daily rewards)
2. Retention: Polymarket surpasses 85% of crypto protocols in user loyalty
3. Regulation: Kalshi is setting a crucial precedent for the legalization of these instruments
4. Integration: from Google Finance, Yahoo, and Stocktwits APIs to Twitter/X and UFC

The Dune Report in Brief

Prediction markets are emerging as new global information infrastructures. They aggregate distributed signals, make them tradable, and update them in real-time. Their accuracy, on-chain transparency, and versatility of use make them fundamental tools in the new paradigm of data-driven finance.

With record volumes, expanding use cases, and growing institutional acceptance, they are poised to become one of the pillars of the new information economy. The question is no longer whether they will spread, but how quickly they will secure a stable place in the global financial fabric.