What is a prediction market? An explanation of how Polymarket, Kalshi, and Myriad work

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Summary

• Prediction markets such as Polymarket, Kalshi, and Myriad enable users to speculate and wager on the outcomes of any future event.
• The price of a “share” in a prediction market ranges from $0.00 to $1, and its price is linked to its probability of winning (odds).
• Once the event occurs, the market settles, and the winning outcome’s share price will become $1.00.

What is a prediction market?

Prediction markets have existed in some form since the 16th century. As long as someone creates a relevant market, they allow users to speculate on the outcome of any future event.

Users can try to predict sports matches, elections, legal cases, and anything with a clear or verifiable result. The core concept is simple: if your prediction is correct, you win; if it’s wrong, you lose your invested principal.

While the mechanism behind it seems simple, it’s actually clever. The price of a “share” ranges from $0.00 to $1, and its price correlates with its implied probability of winning (the “odds”).

For example, if a candidate’s share price is $0.63, then, according to that market, the candidate has a 63% chance of winning. If you want to predict the election outcome, you buy shares of the candidate you believe will win. When the election ends, the market settles, and the winning candidate’s share price will become $1.00. The lower the probability of an event happening, the cheaper it is to buy a prediction for it, and vice versa.

Types of prediction markets:

• Binary markets: Only two options, result is either $1 or $0 (yes or no), e.g., “Will it rain next Monday?”
• Categorical markets: Multiple options, e.g., “Who will win the 2024 US presidential election?”
• Scalar markets: Settle based on whether the result is above or below a specified threshold, e.g., “Will the US population be over 333 million in the next census?”

When participating in prediction markets, you can sell shares at any time. There are no lock-up periods—you don’t have to wait for the event to conclude.

Continuing with the election example, if you believe a candidate will decisively beat their opponent in the upcoming debate, you can buy that candidate’s tokens, expecting their price to rise after the debate, and sell immediately afterward. Odds (and share prices) are constantly changing because they are free markets, driven solely by supply and demand for each share.

On-chain prediction markets often use oracles to convert off-chain real-world data into blockchain-accessible information, determining event outcomes and resolving disputes. For example, decentralized prediction markets can use oracles to allow anyone to submit proof of results, while others can challenge those submissions.

Examples of prediction markets

• Kalshi: Founded in 2018. According to DeFiLlama, as of February 2026, Kalshi is the largest trading volume prediction market. After raising $1 billion in funding in November 2025, the platform’s valuation reached $11 billion.
• Polymarket: Founded in 2020 by Shayne Coplan. As of October 2025, after receiving a $2 billion investment from Intercontinental Exchange (ICE), Polymarket’s valuation was $9 billion. Unlike Kalshi’s centralized trading platform, Polymarket settles markets on-chain. In February 2026, the company filed trademarks for POLY and $POLY, related to a potential token issuance.
• Opinion: An on-chain prediction market launched in Q4 2025 on BNB Chain, backed by Binance founder CZ’s family office YZi Labs. In February 2026, the platform raised $20 million in pre-Series A funding.
• Myriad: Launched in January 2025 by Dastan, the parent company of Decrypt, aiming to provide a new model for the media ecosystem. By integrating with media organizations, Myriad envisions a dynamic participation model designed to realign incentives.

How does Myriad’s decentralized prediction market work?

Myriad is an on-chain prediction market. Ensuring liquidity in on-chain markets mainly involves two models: order books and automated market makers (AMMs).

Myriad’s prediction markets use an AMM model; because AMMs do not rely on counterparties to match orders, they can operate even with low liquidity. Any user can provide liquidity for any market, unlike centralized markets that rely solely on centralized market makers.

Proponents of on-chain prediction markets emphasize that, because liquidity can be sourced from anywhere, they often offer higher liquidity than alternatives. Myriad uses incentives to attract liquidity.

When users participate in Myriad’s prediction markets, they receive shares of the market, which can be traded during the market’s open period. Myriad’s constant function ensures the number of shares in the liquidity pool remains constant. When shares are added or removed, the market’s price adjusts accordingly.

The future of prediction markets

According to a February 2026 report by blockchain security firm CertiK, prediction markets are a rapidly growing industry, with trading volume soaring from $15.8 billion in 2024 to $63.5 billion in 2025.

Mainstream media increasingly view prediction markets as a legitimate way to forecast outcomes. Outlets like The Wall Street Journal and Newsweek report odds from prediction markets alongside traditional polls.

Decentralized prediction markets claim to be more efficient than centralized counterparts because they lack intermediaries, reducing costs. Their decentralized nature also allows for greater privacy, and many markets use cryptocurrency as a payment method, increasing global accessibility.

However, this also presents regulatory challenges. Crypto prediction markets have faced strict regulatory scrutiny; for example, in 2022, Polymarket was fined $1.4 million by the US CFTC.

Despite regulatory and security challenges (such as wash trading risks), the industry appears supported by generational shifts. A January 2026 survey found that nearly one-third of Americans expect online betting to become a bigger and more important part of culture, with younger consumers showing higher awareness of platforms like Polymarket and Kalshi.

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