It’s going to be difficult to build venture scale startups on top of Kalshi and Polymarket. Not impossible, there are still a few interesting ideas floating around, but over time anything valuable you build risks becoming part of their margin stack. My guess is this ends up being a winner takes most market.
It was difficult to understand where value would accrue, so people rushed to build products around prediction markets, under the assumption the end state would play out like defi, token launchpads, or decentralized exchanges.
I think the reality is simpler. Most retail users will access prediction markets through consumer apps, while most sharps will build their own tools
It was absolutely the right move for Polymarket and Kalshi to let others build on top of them. Liquidity begets liquidity, and every product built on top of their infra further concentrated order flow, strengthened network effects, and made it harder for competitors to emerge.
To their credit they’ve spent more than five years grinding through regulatory, liquidity, and distribution challenges to get here. They earned every bit of it.
Also the cost of building software is trending toward zero. As apps become cheaper and faster to build, competitors will continue undercutting each other until fees approach zero, similar to what’s already happening in the prediction market terminal space.
That doesn’t mean there won’t be winners on top. There probably will be a few but if you’re building in prediction markets, your biggest challenge isn’t the market itself, it’s getting distribution and building a net new experience that people will love