Open interest across major prediction markets has broken above $1 billion for the first time ever, signaling a significant expansion in the sector. According to data from DeFi Llama, the total open interest reached $1.066 billion, with $564 million in value locked into trading pairs. This milestone represents a higher baseline of activity compared to the brief spike seen in 2024.
The growth is attributed to increased market liquidity, a growing number of users, and the emergence of new contenders challenging established platforms like Polymarket and Kalshi. While Polymarket remains the leader based on some activity metrics, the overall surge shows the effect of newer platforms entering the space.
Prediction market growth has accelerated over the past three months, boosted by an inflow of new wallets and more diverse markets. However, the sector still carries slimmer liquidity compared to major decentralized exchanges, though open interest is growing exponentially, potentially positioning it to compete with DEXs in the future.
In the short term, seasonal events are driving volumes. Prediction markets are preparing for the Super Bowl season, with an expected inflow of bets on game outcomes. The Winter Olympics are also producing high-volume trading pairs, with up to $4 million in predictions on medals. Current events and politics remain the leading categories on Polymarket.
Platform specialization is becoming evident. Kalshi is the leader for sports predictions, with almost all its volumes concentrated in that category, making it resemble traditional sports betting platforms. In contrast, Polymarket retains a wider list of categories and is noted as the only platform for predictions specifically linked to figures like Donald Trump and his statements.
The sector faces hurdles to wider adoption, including regulatory obstacles. Markets also differ in their internal appeal. While Polymarket and Kalshi report high transaction volumes, competitor Opinion shows a much lower level of transactions, indicating a smaller number of active wallets despite high notional volumes.
Most users are still concentrated on Polymarket, despite the high volumes and open interest reported on competitive platforms, as per Dune Analytics data. Prediction markets are replacing some forms of crypto speculation, especially for short-term prediction pairs like the 15-minute BTC price pair, with their main appeal being a lower possibility of manipulation.
Platforms are battling for mainstream appeal. While Polymarket launched with a crypto insider narrative, most platforms are now looking for fiat rails or using regulated stablecoins like USDC to broaden their user base.
