Regulation is becoming increasingly clear. Paradigm wants to make prediction markets "Pro" active.

Author: Yangz, Techub News

If you’re asking what the most important narratives will be in the first quarter of 2026—and even throughout the whole year—then the prediction market is sure to take its place among them. And at a time when Wall Street giants such as JPMorgan Chase have moved in and regulatory rules are becoming increasingly clear, there’s one player that wants to do something different.

Last night, according to a report by Fortune citing people familiar with the matter, the crypto venture capital firm Paradigm is developing a prediction-market trading terminal aimed at professional traders and market makers, led by partner Arjun Balaji since the end of 2025.

From retail gaming to professional trading: one terminal that connects all liquidity

To understand the weight of what Paradigm is doing here, you need to first see the real picture of prediction markets today.

Prediction markets can hardly be called unpopular right now. Whether it’s Kalshi from traditional finance, Polymarket native to crypto, or other new players, at their core they’re all “siloed” in their own worlds. Each platform has its own order book, its own liquidity pool, and its own API interface. If a professional trader wants to arbitrage across platforms, or spread risk between different venues, they can only open five or six websites at the same time—switching manually, placing orders manually, and keeping records manually.

A deeper pain point is that, on the product-logic side, current prediction market platforms focus on making it “easy to place orders”—a clean interface, intuitive operations. While that’s a friendly consideration for ordinary users, it’s far too basic for professional traders. Take-profit/take-loss, algorithmic arbitrage, multi-strategy portfolios—professional tools that have long been commonplace in both traditional financial markets and crypto markets—are almost entirely absent in the prediction market space.

For quant teams that are used to executing strategies with algorithms in crypto markets, the trading experience in prediction markets can only be described as “primitive.” And that is exactly where Paradigm is entering.

What Paradigm wants to do is not only to address the superficial pain point of “liquidity fragmentation,” but to inject real “professional execution capability” into prediction markets—building a true, work-ready battleground for professional traders. In fact, Paradigm’s move toward specialization has already been building quietly. In early February this year, the company launched Paradigm Predictions, a data dashboard. Although it’s only a data visualization tool, it undoubtedly clears the path for the company’s current plan for a professional trading terminal.

From single-issue events to index trading: upgrading the gameplay dimension

If the trading terminal solves the question of “how to trade,” then another line Paradigm is exploring is answering “what to trade.”

In today’s prediction markets, you can only bet on whether “A will win” or whether “B will happen.” But Paradigm is trying to package multiple related events together and explore the feasibility of creating prediction market indices. Imagine that users no longer need to research every single specific game, but can instead trade something like a “sports season volatility index”; or that they no longer have to agonize over the outcome of a particular regional conflict, but can directly buy a “geopolitical volatility index.”

Of course, what indexization brings is not only richer gameplay—it also brings a qualitative shift in market structure.

For retail investors, indices lower the barrier to research and decision-making. You don’t have to judge the outcome of any specific event—you just need to grasp the overall trend. For institutions, indices provide a tool to hedge macro risks. When political uncertainty becomes the primary source of risk for an investment portfolio, institutions can hedge through a “political volatility index” instead of trying to bet on the outcome of every election.

From speculation to hedging, from gambling to insurance—this is the real change indexization brings to prediction markets. It can help prediction markets move beyond the tacky appeal of “gaming” and start to resemble a truly “asset class.”

In addition, it’s worth noting that Paradigm is also considering setting up an internal market-making division. As early as the end of 2024, Paradigm had been researching automated market maker algorithms specifically for prediction markets (pm-AMM). If Paradigm ultimately provides both terminal tools and index underlyings—and also personally steps in to make markets—then it will effectively recreate a “Goldman Sachs + Bloomberg” kind of hybrid in the prediction market space.

What’s the basis: Balaji’s quant DNA deeply tied to Kalshi

There are two key factors supporting this series of moves by Paradigm.

First is the quant background of the project’s leader, Arjun Balaji. Before joining Paradigm, Balaji wasn’t a typical venture capital analyst—he was an independent macro researcher active at the boundary between Wall Street and crypto. He has long provided crypto derivatives pricing models to hedge funds in New York, and he’s deeply familiar with the “quirks” of professional traders regarding liquidity depth and execution efficiency. In other words, this isn’t simply an “app developer who understands crypto”—it’s an expert in “financial infrastructure” reconstructing trading tools.

Second is Paradigm’s deep binding with Kalshi. Paradigm cofounder Matt Huang is currently serving on Kalshi’s board, and in Kalshi’s valuation jump over the past year, you can see Paradigm’s fingerprints everywhere. Over the last year, Kalshi’s valuation rose from $2.0 billion in mid-2025 to $22.0 billion in March 2026—an 11x increase in under a year. Paradigm has been present almost the entire time—leading the Series C, participating in Series D, leading again in Series E, and continuing to participate in the latest round. This kind of sustained commitment goes beyond ordinary financial investment—it looks more like a strategic, deep binding. And what this binding will bring to Paradigm’s terminal is a base of liquidity backed by compliance.

If the former determines the ceiling of this terminal tool—after all, only those who truly understand trading can build a product that professional traders are willing to use—then the latter sets its starting line. Only compliant platforms that hold sufficient liquidity can support the initial “respectability” of a terminal.

Conclusion

Arjun Balaji’s quant insights are the spear, while Kalshi’s compliant liquidity is the shield. Through building a professional trading terminal, exploring index-based products, and even personally stepping in to make markets, Paradigm aims to reshape prediction markets from a scattered “gambling bazaar” into a “new asset class” with depth, efficiency, and hedging capabilities.

For Paradigm, this is both a strategic positioning by a crypto venture capital firm in an emerging track, and a long-term experiment into financial infrastructure. Its ultimate ambitions may be far more than just providing traders with a handy tool. Once prediction markets meet execution standards and offer a product matrix comparable to traditional finance, the narrative will complete a fundamental shift—from “betting on event outcomes” to “managing macro risks.” At that point, the real counterparty to prediction markets won’t just be gamblers, but global capital seeking to hedge uncertainty. In the first quarter of 2026, perhaps this experiment will be the watershed year when it moves from concept to reality.