The recent divergence in how investors value Polymarket and Kalshi is noteworthy given that the two companies’ valuations have moved in lockstep for the past year. Polymarket and Kalshi offer nearly the same product, and if prediction markets turn into a winner-take-most sector, then the horse race between the two startups could have major stakes for investors.
One key difference between the firms, though, is that Polymarket’s non-U.S. arm is built on blockchain rails, and the project has deep roots in the crypto space: Its 2020 seed round was backed by crypto venture capital firms Polychain, ParaFi, and 1Confirmation. This is in contrast to Kalshi, which runs on traditional financial rails and is generally less ingrained in the crypto world.
“Polymarket’s volume is being read as pure product demand. Airdrop farming is why that read is misleading,” Eric Chen, cofounder of the blockchain Injective, told Fortune. “Polymarket has real demand, and the honest question is what share of the reported number actually represents it.”
For some industry watchers, it will be difficult to separate Polymarket’s organic usage from users jockeying for an airdrop until after it releases its token.
“None of this takes away from the platform’s innovation or long-term potential, but it does mean that volume and user growth should be viewed with context,” Digital Wealth Partners CEO Max Kahn said. “The key question over time will be whether engagement remains strong once incentives fade, as that’s a better indicator of durable usage and product-market fit.”
“Looking back at HYPE, they were very [successful] and continued to be so afterwards,” Nansen research analyst Nicolai Søndergaard said. “So even if a lot of volume is happening due to airdrop farming, it is not cause for concern if the underlying ‘product’ is good enough and will keep people around.”
