Kalshi’s value is almost double that of its competitor Polymarket. Why?

The above scenario describes the race between Kalshi and Polymarket to dominate prediction markets, a field that has been around for years but only took off in 2024 thanks to a more lenient regulatory environment. At the moment, Kalshi is gathering new users in the US, who are betting on everything from sports to political events, while Polymarket is still getting its papers in order to operate legally in this country. Both companies announced new funding rounds last week, but Polymarket had a bigger hit at a valuation 9 billion dollars.

The offerings from the two startups are similar to those offered by Uber and Lyft. The only significant difference, apart from the start of the regulatory process, is that Polymarket is built on blockchain rails. Everything is Jogging to add crypto capacity, but it will be difficult to catch up with its competitor, which has been clearing transactions on the Polygon Layer 2 network since its inception, and has a founder who participated in the Ethereum crowdsale while still in high school. Critics can find a lot of faults in Polymarket but no one can question the good faith of cryptocurrencies.

The hardest question is Why Polymarket’s cryptocurrency pedigree makes its value far greater than its competition. This is especially the case at a time when Kalshi captures large portions of the US sports gambling market, outpacing Polymarket in terms of app downloads and active users. The answer here probably boils down to two words: token drop.

Shane Coplan, CEO of Polymarket, shared a mail Last week, cryptocurrencies, including a (so far fictitious) token called POLY, ranked in fifth place, just behind Solana and Ethereum. The company has hinted elsewhere that the currency is likely to fall next year, and if that happens, look for Coplan and Polymarket investors to be in a position to score a windfall.

In the meantime, Calci’s founders may have to get rich the old-fashioned way: building the most popular service, working to expand and defend its significant early market advantage in the US. The task will not be easier considering the fast-moving giants such as Robin Hood and Robinhood. Coinbase They also take a keen interest in the emerging prediction market industry.

The final point in all of this is that both Polymarket and Kalshi are run by flawed CEOs. As mentioned in A Latest magazine featureThere are red flags about whether Coplan has the maturity to launch a fast-moving startup along the way. Meanwhile, Kalshi’s CEO, Tariq Mansour, has a penchant for deceptive tactics that have damaged his company’s reputation.

Finally, there is the question of which startups can execute best in a controversial and highly regulated new industry. For now, Kalshi has an advantage here thanks to its tight legal approach to issues like dispute resolution and ethical controls. Polymarket, on the other hand, has an opaque dispute process controlled by opaque cryptocurrency owners. The company also has a laissez-faire stance in approving contracts, which has led to controversy over the inclusion of “arson market” bets such as those on President Donald Trump’s bets. demiseAnd history Trading wash On its platform. These are challenges that token drops alone will not solve.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

Decentralized news

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Main character of the week

Anthony Cowan – Bloomberg/Getty Images

“Bitcoin Jesus,” or Roger Ver, a colorful character from the early days of cryptocurrency who earned his nickname by giving Bitcoin to random people, is back in the news. Ver, who renounced his US citizenship in 2014, was arrested in Spain on criminal tax fraud charges in the US last year – but has now reached the point of colony With the Department of Justice, which will pay him $48 million in exchange for dropping the charges.

Mimi, oh wait

@crypto_rand

The modest gains that followed Friday’s massive market wipeout spawned a series of memes, such as The one above By crypto bulls reassuring each other that the worst is over. But while the broader market feels overheated, the actual path is anyone’s guess.