Kalshi makes move to court crypto traders with tokenized betting contracts

Kalshi bettors will now be able to buy and sell tokenized versions of their bets on Solana, the company told CNBC exclusively on Monday. It’s the latest sign that the prediction market firm is deepening its push to win over the same cryptocurrency holders who are pumping billions of dollars in digital assets into rival Polymarket.

Tokenization means creating a digital version of a real-world financial asset, such as a stock, bond, or treasury bill. The resulting token, which can be held or traded like a normal asset, lives on a decentralized ledger called a blockchain, like Solana or Bitcoin.

The tokenized versions of the contracts work the same as the regular versions previously available on Kalshi’s platform. However, when tokens are traded instead of actual contracts, users have greater anonymity. This puts Kalshi on par with Polymarket, which allows users to trade directly on-chain.

Support for tokenized betting linked to Kalshi’s event contracts is live on Solana, Kalshi told CNBC. Decentralized finance protocols DFlow and Jupiter will serve as institutional clients, bridging Solana’s liquidity with the exchange’s off-chain order book.

Kalshi is doubling down on efforts to sue crypto holders as demand for event contracts grows. The combined trading volume of prediction markets reached nearly $28 billion through October this year, reaching a weekly record high of $2.3 billion in the week of October 20, data show. Quoted by Crypto.com‘s research arm.

By tapping into the $3 trillion digital asset market, Kalshi can bolster the liquidity needed to scale its offerings at a time when investors’ appetite for prediction markets is rapidly growing, the company’s head of crypto, John Wang, told CNBC.

“There are a lot of power users in crypto,” Wang said. “It’s about leveraging the billions of dollars of liquidity that crypto has and then allowing developers to build third-party frontends that use Kalshi’s liquidity.”

Founded in 2018, Kalshi became the first exchange to launch federally regulated event contracts for American traders in U.S. congressional races in late 2024, shortly after winning a years-long legal battle against the Commodity Futures Trading Commission.

Kalshi has since added more event contracts to its platform, which operates in approximately 3,500 markets, according to a company representative. This last fall Raised more than $300 million It reached a $5 billion valuation in a funding round backed by crypto heavyweights Andreessen Horowitz and Sequoia Capital and also expanded its footprint to more than 140 countries.

However, the first-mover advantage may not be enough to keep the platform competitive, especially as Polymarket relaunches in the US, Kalshi will need to continue growing to outpace its rivals, and will need plenty of liquidity to do so, according to Wang; This is something crypto native traders funds can provide.

The executive said digital asset holders tend to be particularly active in prediction markets, trading at higher volumes compared to their non-crypto counterparts, meaning their presence on the platform will meaningfully increase liquidity in Kalshi’s markets. Kalshi added that by leveraging this huge liquidity, it can provide competitive and accurate pricing on its platform.

“If you have a market with no liquidity, then you don’t really have a market,” Wang said. “People can’t really trade at the size or get the prices they want.”