Building Regulated Crypto Prediction Markets w/ John Wang, Kalshi

Kalshi's crypto prediction markets have grown from roughly 2 to 4 percent of exchange volume at the start of the year to approximately 20 to 25 percent, making crypto the second largest category on the platform behind sports. John Wang, who joined Kalshi specifically to bridge the company into crypto, attributes this to a broader thesis that regulated crypto represents the next major era of the industry, citing Coinbase, Circle, and Kraken as validation. Crypto is also the only deposit method available to international users, and crypto deposits and withdrawals are used heavily by power users including sports bettors.

Kalshi's primary product market fit has been crypto price trading, with instruments designed to resemble options but packaged for retail accessibility by removing complex payoff functions and Greeks. Wang says Kalshi grew from roughly 5 percent of crypto prediction market volume share when he joined to around 85 percent compared to Polymarket. The key driver of that shift was oracle design. Kalshi uses a TWAP over the last 60 seconds aggregated across multiple exchanges to determine resolution price, while Polymarket uses only Binance and a single-second resolution price, which Wang argues makes Polymarket more susceptible to manipulation. Liquidity providers migrated to Kalshi as a result of this more manipulation-resistant design.

Kalshi's market resolution process is also more structured than Polymarket's. Wang says Kalshi's resolution rules cover edge cases with less discretion, whereas Polymarket often uses a single paragraph with room for interpretation and outsources its oracle design to a group of whales, while Kalshi uses an in-house team with 24/7 coverage. Wang acknowledges that event contracts by nature involve some discretion on the part of those who settle them, and notes that a common barrier to trading on prediction markets is uncertainty about settlement rules rather than uncertainty about the underlying event outcome.

Wang frames Kalshi's regulatory posture as activist rather than passive, saying the company works directly with regulators to shape rules rather than simply complying with existing ones, and credits Kalshi with having legalized prediction markets and perpetuals in the US. He argues that regulation improves market structure in prediction markets specifically because KYC and rules around event-based insider trading reduce toxic flow that would otherwise deter liquidity providers and prevent markets from scaling. The host observed that the regulated selling point resonates less with crypto-native users already accustomed to unregulated markets, while Wang argued the larger opportunity is the much broader population not yet onboarded to financial products, where regulatory credibility matters more. Wang also noted that incumbent interests including casinos and sports betting companies have actively campaigned against prediction markets, and that sports betting company stocks dropped significantly after Kalshi began growing.

Kalshi recently launched what it describes as the first regulated perpetuals exchange in the US, currently offering around a dozen coins, bundled into a product called Kalshi Pro. Wang says the company has been working on perpetuals for nearly two years including spec work, risk modeling, and infrastructure buildout. A major infrastructure challenge was solving 24/7 money movement, including weekend variation margin calls when banks are closed, which Kalshi addressed using stablecoins and crypto-forward banking providers. Kalshi is also seeking CFTC approval for non-crypto perpetuals including gold, silver, and palladium, and Wang predicts non-crypto perpetuals will be where competition really heats up given access to the largest capital markets economy in the world.

Kalshi is not an on-chain company, and Wang described that as a regulatory constraint rather than a philosophical position, noting that the largest crypto businesses globally including Binance, Coinbase, Bybit, and OKX are all centralized and off-chain. Kalshi's co-founders have publicly stated they expect the platform to eventually move on-chain in line with regulatory direction from the SEC and CFTC. Wang draws a distinction between settlement rails, where on-chain movement makes sense, and decentralized matching, which he does not view as viable or necessary in a regulated context.

Kalshi created what it describes as the first forward curve for compute, working with index provider Orin to standardize compute pricing by scraping data from hundreds of neo-clouds. The forward curve currently shows steep backwardation, meaning current compute prices are high but the market expects supply and demand dynamics to ease around October. Wang noted that compute expenses by the largest technology companies are already around 700 billion dollars per year and projected the compute market could grow approximately 10 times by the end of the decade. Kalshi is available in 140 countries and is the only prediction market where US and international users share the same order book and liquidity pool, which Wang contrasted with Polymarket's fragmented approach.