What Prediction Markets Are
A prediction market lets users trade on the outcome of a real-world event, expressed as a yes or no question. For example: Will the Boston Red Sox win the World Series? Users trade either yes or no.Outcomes are always binary. Even in a matchup like Boston Red Sox vs. New York Yankees, the market does not ask “Which team will win?” Instead, each team has its own yes/no market, such as “Will the Boston Red Sox win the World Series?” and “Will the New York Yankees win the World Series?”
Why You Should Care
In 2025, total volume across major prediction market platforms reached about $44B, with most volume split between Polymarket and Kalshi. Prediction markets to turn real-world events into tradable assets. This creates new opportunities for trading UX, portfolio UX, and post-event settlement UX without inventing a new interaction model.Why Tokenization Matters
Tokenizing prediction markets on Solana makes them usable inside the rest of the onchain economy. Instead of keeping positions inside a single venue (Kalshi), builders can treat prediction market positions like other SPL tokens and unlock new product designs. For example, builders can create apps where users:- Trade outcomes inside a Solana wallet.
- Track positions alongside spot holdings.
- Route trades through Solana trading primitives.
- Use outcome tokens in other onchain apps while markets are open.
How Prices Map To Probabilities
Prediction market prices are often read as probabilities because they reflect how traders are willing to position under risk. If a “Yes” outcome is trading at 60, traders are collectively pricing that outcome as roughly a 60% chance. If new information appears, traders adjust their positions, and the price moves. This makes prices easy to reason about: they update as information changes, and they summarize many independent views into a single signal. Vitalik Buterin has described prediction markets as useful because they reward being correct and penalize being wrong, which helps prices converge toward accurate expectations over time.How DFlow Supports Prediction Markets Today
DFlow’s Prediction Markets API gives builders programmatic access to tokenized Kalshi markets on Solana, so apps can let users trade prediction markets using the same trading primitives used elsewhere on Solana.Kalshi is a U.S. prediction market platform that offers event contracts and operates under CFTC oversight.
Outcome Tokens
Outcome tokens are tokens that represent positions in a prediction market outcome. A market typically maps to outcome tokens like “Yes” and “No.” Users can buy, sell, and hold these tokens while the market is open. From a user’s perspective, they behave like other tokens:- Users can trade them again before resolution.
- Users can hold them as a position.
- Users can redeem after resolution.
How Markets Resolve
Every market resolves to an outcome. Resolution is the transition from “trade” to “settle”:- One side becomes redeemable.
- The other side becomes worthless.
How Settlement And Redemption Work
After resolution, users redeem outcome tokens for value according to the market result. This creates a second phase of UX that does not exist in spot trading:- Redemption flows.
- Position closeout UX.
- History and receipts UX.
- Closing outcome token accounts to reclaim rent.
Entering a Position in a Prediction Market
Entering a prediction market position this flow:- A user discovers a prediction market.
- The user selects an outcome to trade.
- A quote is requested for that outcome.
- The user signs and submits a trade.
- The user receives an outcome token representing their position.
What Builders Can Build
- Market discovery (categories, search, trending).
- Market detail pages (price chart, liquidity, positions).
- Trading UX for outcome tokens (buy/sell, limits, slippage).
- Portfolio + PnL views across spot and prediction positions.
- Automation (alerts, conditional trades, rebalancing).
- Post-resolution redemption UX and receipts.
- Composable apps that treat outcome tokens like other assets (for example, collateral or lending primitives).
KYC Requirements
Prediction market applications must use Proof to meet Kalshi compliance requirements.Regulatory and Compliance Requirements
Prediction market trading through Kalshi is subject to U.S. regulatory requirements. Builders integrating tokenized Kalshi markets are responsible for ensuring their applications comply with Kalshi’s member obligations. This includes enforcing geo-blocking for users in the United States and other restricted jurisdictions. Kalshi operates as a CFTC-regulated exchange, and access to its markets is prohibited from certain countries and regions. Access must be blocked from the United States and the following jurisdictions: Afghanistan, Algeria, Angola, Australia, Belarus, Belgium, Bolivia, Bulgaria, Burkina Faso, Cameroon, Canada, Central African Republic, Côte d’Ivoire, Cuba, Democratic Republic of the Congo, Ethiopia, France, Haiti, Iran, Iraq, Italy, Kenya, Laos, Lebanon, Libya, Mali, Monaco, Mozambique, Myanmar (Burma), Namibia, Nicaragua, Niger, North Korea, People’s Republic of China, Poland, Russia, Singapore, Somalia, South Sudan, Sudan, Switzerland, Syria, Taiwan, Thailand, Ukraine, United Arab Emirates, United Kingdom, Venezuela, Yemen, and Zimbabwe, as well as any jurisdiction subject to comprehensive U.S. country-wide, territory-wide, or regional economic sanctions. Failure to comply may result in enforcement actions, including revocation of API access. Builders should review Kalshi’s Member Agreement and ensure all required geographic and regulatory restrictions are enforced before enabling prediction market trading.Code Recipes
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