Author: Nancy, PANews

The leading players in the prediction market are extending their battles to the larger derivatives stage.

On April 22, Polymarket and Kalshi both announced significant news, with the two giants in prediction markets planning to enter the perpetual contract space, covering cryptocurrencies, U.S. stocks, and commodities.

Moving to the perpetual contract arena, Polymarket takes the lead

On April 14, Kalshi was the first to signal its intentions, announcing a new product launch on April 27. The teaser video showcased a green spiral forming a perpetual loop, ultimately revealing the word "Timeless." The community speculated that this update might introduce a perpetual prediction market without an expiration date.

Then, on April 22, The Information exclusively revealed that Kalshi plans to launch a perpetual futures product, starting with cryptocurrency-linked perpetual contracts, with the potential to expand this model to commodities and other asset classes in the future. Initially, it will use U.S. dollars as collateral, with stablecoin support introduced later.

However, almost simultaneously, Polymarket took the initiative. On April 22, Polymarket directly announced the launch of perpetual futures linked to cryptocurrencies, U.S. stocks, and commodities, stating that registration could provide early access.

Timing-wise, it is hard to call this a coincidence. As direct competitors, Polymarket clearly intends to capture market narratives and user attention before Kalshi's product officially launches, trying to establish a first-mover advantage.

Despite both holding CFTC-approved Contract Market (DCM) licenses, their paths show significant differences.

Polymarket’s core user base consists of crypto-native traders who are already very familiar with the mechanisms of perpetual contracts, making migration costs low. Meanwhile, since Polymarket primarily operates under an offshore structure, its product design and update rhythm can be more flexible, quickly covering various asset targets and serving users globally.

However, Polymarket's U.S. compliance business has just started, and it is still in the early stages regarding regulatory adaptation and user experience, leaving high uncertainty.

In contrast, as a compliance-based platform, Kalshi not only holds a DCM license but has also recently been approved to provide margin trading, fulfilling the criteria for formally entering the derivatives market. This allows Kalshi to legally provide related services in the U.S., making it easier to attract institutional funds, compliant retail investors, and users with lower risk appetites. Especially as U.S. regulatory agencies appear to be gradually leaning towards a more relaxed approach to perpetual contract business, this compliance moat could become Kalshi's competitive advantage.

However, Kalshi's reliance on the U.S. market will also somewhat limit its expansion speed.

After a valuation of ten billion, why do the two giants embrace derivatives together?

The simultaneous shift to perpetual contracts by the two leading prediction markets may not be coincidental.

First is the pressure of valuation and growth. Standing at the threshold of a ten-billion-dollar valuation, Polymarket and Kalshi both need stronger revenue capabilities to support the rising market expectations.

In just one year, Polymarket's valuation skyrocketed from one billion dollars to fifteen billion dollars, an increase of about 15 times; meanwhile, Kalshi's valuation doubled from around 1.1 billion dollars to 2.2 billion dollars, an increase of nearly 20 times.

Behind this surge in valuation is a re-evaluation by capital of the explosive expansion of trading volume in prediction markets, the narrative of the sector, and the potential for future growth. According to Dune, the monthly nominal trading volume in April 2026 reached 16.96 billion dollars, up more than 9.3 times from 1.82 billion dollars in the same period of 2025.

However, the valuations of such high-growth companies are often based on forward-looking pricing, holding optimistic expectations for sustained high growth. If actual revenue and profitability cannot quickly keep pace with the expansion of trading volume, there is a significant risk of valuation correction. Investors place more emphasis on the sustainability of the business model and cyclical resilience, rather than just the current scale.

Currently, the core liquidity of prediction markets is still highly dependent on the sports sector. Dune data shows that as of April 22, the weekly trading volume from the sports sector accounted for as much as 73.7%, far surpassing other categories like cryptocurrencies, politics, and entertainment. This structural dependency on a single segment makes platform revenue susceptible to seasonal fluctuations in sporting events and the cyclical popularity of major events.

Relying solely on event-driven growth for prediction markets has a clear ceiling, making revenue prediction challenging and highly volatile, insufficient to support sustained high valuation expectations. Recently, Polymarket adjusted its fee structure to achieve revenue monetization. In contrast, perpetual contracts have a much larger market space, and their layout is expected to bring higher trading volumes, greater user stickiness, and more stable fee income for Polymarket and Kalshi, thereby achieving business diversification and further strengthening valuation support.

Secondly, there is a shift in regulatory attitudes. The change in the U.S. regulatory stance towards perpetual contracts provides a critical regulatory window for platforms like Kalshi and Polymarket to launch Perps.

Just recently, CFTC Chairman Michael Selig indicated that promoting genuine cryptocurrency perpetual contracts back to the U.S. is a core component of the CFTC's innovation policy agenda. He mentioned that due to past regulatory lag, significant related liquidity has flowed overseas, and the CFTC is accelerating the establishment of a framework to strive to provide a clear path for true perpetual futures within weeks to reshape the competitiveness of the U.S. in the derivatives market.

In contrast, prediction markets still face regulatory uncertainties. Recently, New York State sued Coinbase and Gemini, accusing them of operating an illegal prediction market.

According to Bloomberg, prediction markets are currently ramping up their lobbying efforts in Washington to respond to increasing regulatory pressures. Companies like Kalshi are hiring lobbying teams to counter potential Congressional actions against the industry. In the first quarter of 2026, lobbying expenditures in the industry reached at least 1.84 million dollars, hitting a historical high, with a year-on-year increase of over 60%. Kalshi has registered two new lobbying firms and hired former Obama advisor Stephanie Cutter to expand influence within the Democratic Party.

Third is the quickening competitive landscape. As prediction markets become popular, more potential competitors are speeding up their entry, including traditional companies such as JPMorgan, Charles Schwab, and Castle Securities, and crypto institutions like Binance, OKX, Hyperliquid, Paradigm, and Coinbase have already established or plan to establish related businesses. Faced with a crowded field, Kalshi and Polymarket must step out of their original comfort zones to seek new growth curves.

Additionally, there is the conversion of existing user traffic. Besides sports, the crypto sector is one of the fastest-growing categories in prediction markets, and existing crypto user traffic can seamlessly transition to the derivatives market. As of April 22, Dune data shows that the weekly nominal trading volume from cryptocurrencies on Kalshi accounted for 10.8%, while on Polymarket it reached 21.8%, both second only to sports.

However, whether these two new players in the derivatives space can construct perpetual contracts as a sustainable growth engine will still require time to validate.

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