Crypto News

Kalshi Outpaces Polymarket in Prediction Market Volume Amid Surge in U.S. Trading

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Kalshi is pulling ahead in the prediction market race, capturing a dominant share of trading volume even as competitors like Polymarket push into regulated U.S. territory.

From Sept. 11 to 17, Kalshi accounted for 62% of total volume in the on-chain prediction market sector, according to data from Dune Analytics, while Polymarket’s stood at 37%. The former’s weekly trading pace topped $500 million, with an average open interest of around $189 million.

Its volume is beyond that of Polymarket, which stood at $430 million, and its average open interest of $164 million, which implies “sticker positions on Polymarket and faster turnover on Kalshi.”

Polymarket’s longer-term markets, which often stretch over weeks or months, keep user funds locked in for longer periods, essentially.

This shows up in the open interest-to-volume ratio: Polymarket averaged 0.38, while Kalshi sat lower at 0.29. That suggests Kalshi’s users are trading more often, while Polymarket’s positions tend to sit.

Still, Polymarket is building out a greater position in the U.S. The platform has cleared its acquisition of QCX, a regulated derivatives exchange, to enter the country again.

It has also launched earnings-based markets with social investing platform Stocktwits, designed to let stockholders hedge earnings risk and analysts gauge market sentiment in real time.

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Who are Crypto Market Makers and Market Takers?

Understanding liquidity and trading dynamics is essential for those entering the cryptocurrency market. This knowledge helps young investors handle unpredictable crypto markets with minimal losses. At the heart of these dynamics lie two central roles: crypto market maker and taker. Their activities create a liquid, efficient, and dynamic trading environment essential for the healthy functioning of any financial market.

What is a market maker? What is a taker? And what are their roles in crypto trading? This article unveils these common questions for beginner investors.

What is Market Liquidity?

In simple terms, market liquidity is the ease with which an asset can be quickly bought or sold without changing its price. High liquidity is synonymous with a stable market, where transactions can occur seamlessly and with minimal slippage. In contrast, low liquidity leads to a more volatile market, where trades can significantly impact the asset’s price. Crypto volatility, inherent in the digital assets market, highlights the importance of liquidity for maintaining market stability and investor confidence.

Who are Market Makers?

A market maker is an individual, a financial entity, a crypto market making company, or a high-frequency trader responsible for providing liquidity to the market by continuously buying and selling cryptocurrencies at publicly quoted prices. A crypto market maker operates on a market maker platform, using advanced algorithms to quote both buy and sell prices for particular crypto assets around the clock.

The role of market makers extends beyond simply facilitating trades. They also help narrow the bid-ask spread. That’s the difference between the highest price that buyers are ready to pay and the lowest price that sellers would accept. This narrowing reduces trading costs for all market participants and contributes to more efficient trading.

Market makers take on the risk of holding cryptocurrencies in their inventory, exposing them to volatility. They manage this risk through various strategies, including hedging and adjusting their quoted prices based on market conditions.

Calculating profit and loss (PnL) is crucial for crypto market makers because it helps them evaluate their performance. How to calculate PnL? Here is a short instruction:

Realized PnL. It is the profit or loss made on completed transactions. It’s calculated by subtracting the buying price from the selling price for each trade. If a market maker buys 1 token at $10,000 and sells it at $10,200, the realized PnL for this trade is $200.
Unrealized PnL refers to the profit or loss on positions that have not yet been closed. It’s calculated based on the current market prices compared to the prices at which the assets were initially bought or sold. If a market maker holds 1 token that was purchased for $10,000, and the current market price is $10,500, the unrealized PnL is $500.

A market maker must consider the value of their holdings, which can fluctuate with market movements. These changes directly affect the PnL. If the market value of the inventory increases, it positively impacts the PnL, and vice versa.

Who are Market Takers?

Market takers in crypto are individuals or entities that execute trades based on the prices provided by market makers. When a market taker decides to buy or sell a cryptocurrency, they choose the best available price in the market, thus “taking” the liquidity out. This role is not less important in the trading ecosystem, as it ensures that transactions are executed, contributing to the market’s volume.

The difference between maker vs taker is crucial in understanding trading fees on various platforms. Typically, market takers pay slightly higher fees than market makers. That’s the cost of taking liquidity out of the market. Low fees for makers stimulate market participants to provide liquidity rather than take it out.

What is Market Making in Crypto?

Market making involves using automated systems and algorithms by market-making companies to provide liquidity on exchanges. These systems constantly change buy and sell orders based on real-time market conditions to ensure they are providing competitive prices. The goal is to profit from the spread between buying and selling prices while minimizing the risk posed by market volatility.

The significance of market-making extends to stabilizing crypto prices. In markets where liquidity is low, a large order execution can move prices, creating an arbitrage opportunity but also increasing the risk for regular traders. Market makers reduce such risks by ensuring that there is always enough volume on both sides of the order book (to buy and to sell).

Market makers and market takers in crypto play complementary roles in the crypto ecosystem. Their interplay forms the backbone of the cryptocurrency trading landscape. By ensuring liquidity, minimizing price volatility, and facilitating efficient trade execution, they create a favorable environment for investors. As the crypto market continues to grow and more participants come in, the roles of makers and takers will undoubtedly adapt to new challenges and opportunities.

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AI the New Tech Stack

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The Internet Computer ICP$4.7751, a blockchain project that has sought to differentiate itself from rivals, is doubling down on its pitch as the go-to network for on-chain artificial intelligence (AI).

This could be the beginning of a new tech stack – one in which AI, not humans, becomes the primary developer of applications, according to Dominic Williams, founder of Internet Computer developer Dfinity.

Williams argued that while crypto prices remain driven largely by market mechanics – treasury operations, liquidity games and speculation – the underlying technology will eventually force a reckoning in an interview with CoinDesk.

“In the long run, markets begin to reflect realities on the ground,” he said. “But as yet you’re not seeing what’s happening with Internet Computer reflected in ICP’s price.”

Running AI on-Chain

The Internet Computer first demonstrated neural networks running as smart contracts in April last year, starting with image classification and later facial recognition, Williams said.

While those were relatively simple models compared to large language models – the kind that power AI tools like ChatGPT and Gemini – they were proof of concept: that AI can run natively on a blockchain. No other network has achieved this, Williams pointed out, despite the chatter about “decentralized AI.”

Where others rely on off-chain infrastructure like Amazon Web Services, ICP seeks to integrate the full AI development and execution stack on-chain. Williams describes this as “a self-writing internet” – a system where users describe what they want, and an AI delivers it as a working application, hosted directly on Internet Computer.

The bigger idea, Williams said, is that AI itself will replace much of today’s developer workflow. Instead of humans writing code, configuring databases and maintaining servers, an AI could spin up applications instantly, update them continuously and ensure resilience through blockchain-based guarantees.

This reframes the blockchain not just as a settlement layer for tokens, but as the optimal environment for AI-generated applications. ICP’s design, with features like “reverse gas” – the model where developers pay for the computational costs of their applications, rather than requiring end users to pay a transaction fee – removes the need for firewalls or database migrations that plague traditional infrastructure.

“AI is developing these apps hundreds of times faster than humans could,” Williams said. “And because there are no system admins standing by, you need the guardrails only blockchain can provide.”

Williams pointed to early hackathons where ordinary people used AI on ICP to build apps: from a crowdsourced pothole-mapping platform, to a tool for generating wills and health directives.

The vision is that such tools could proliferate in the millions. Entrepreneurs, small businesses and even NGOs could create customized apps without technical expertise, paying for usage with fiat while crypto tokens underpin the system behind the scenes.

Price Action Still Lagging

Despite these developments, the ICP token has yet to see sustained momentum. It briefly rallied when AI integrations were announced last year, but has since traded more in line with broader market sentiment than with user adoption.

Williams accepts this disconnect but predicts that markets may catch up very soon.

“This could be the first time Web3 actually outcompetes Web2 technologically, without a token incentive in sight,” Williams said. “The shock will be when people realize they can just talk to an AI, and a blockchain app appears at a URL.”

Crypto News

Russian Finance Minister: Ruble Is “Strong,” Enhances Budget Traceability

Russian Finance Minister: Russian Ruble Is 'Strong,' Enhances Budget Traceability Anton Siluanov, Russia’s finance minister, said the digital ruble, Russia’s CBDC, is a “strong” and “reliable” alternative to the fiat ruble. He said the digital ruble has special potential for budgetary payments, enhancing control and traceability. Russian Finance Minister Reinforces Potential of Digital Ruble for Budgetary Settlements While stablecoins have become the de facto killer […]