Prediction markets are no longer niche betting venues — they are emerging as a new financial primitive for pricing real-world events. This report analyzes $90B+ in notional volume across leading platforms to answer the questions that matter:

Who is actually setting prices?

How deep and scalable are these markets?

Where is real liquidity vs. surface-level volume?

And do prediction markets truly reflect “wisdom of crowds”?

For institutions, traders, and builders evaluating prediction markets as a signal layer, trading venue, or future financial infrastructure.

By Elton Shehdula, Research Lead @Allium

What's inside:

1. Market structure & growth — Volume, open interest, and participation trends across Polymarket and Kalshi. How the market scaled to $90B notional in 6 months and what that actually represents.
2. Liquidity & depth reality — Why most markets are thin despite high volume. Distribution of orderbook depth and what size can realistically be executed without moving price.
3. Concentration & price formation — Who drives the market. Analysis showing 1% of wallets generate 65% of volume, and what that means for “wisdom of crowds.”
4. Market segmentation & use cases — Breakdown of activity across sports, crypto, and politics. How different categories behave in terms of volume, accuracy, and trading dynamics.
5. Price accuracy & signal quality —What participants are actually doing: market making, arbitrage, signal extraction, high-frequency trading, and cross-market positioning.
6. Trading behavior & strategies — What participants are actually doing: market making, arbitrage, signal extraction, high-frequency trading, and cross-market positioning.‍
7. Institutional implications— What this means for hedge funds, trading desks, and financial institutions using prediction markets as a signal layer or trading venue.