Core Pain Points and Industry Bottlenecks

(1) Regulatory Uncertainty The regulatory status of prediction markets remains ambiguous. The U.S. CFTC classifies them partially as “event contracts,” but individual states have divergent attitudes. Kalshi has received cease-and-desist orders from seven states, and some jurisdictions even classify prediction markets as “gambling derivatives.” Compliance has become the ceiling of growth, rather than its accelerator.

(2) Insufficient Liquidity The vast majority of trading volume is concentrated in a few popular events. Smaller markets suffer from severe slippage due to the lack of market-making capital. High entry barriers and low capital efficiency lead to limited overall market depth.

(3) Oracle and Security Risks Decentralized platforms heavily rely on external data sources. Once manipulated or delayed, these can cause erroneous settlements and a collapse of trust. Historically, Augur and several experimental platforms have experienced settlement delays or data conflicts.

(4) User Experience and Cost Issues Complex creation processes, high gas fees, and cross-chain waiting times discourage average users. As a result, the potential of information financialization within prediction markets has not been fully realized.