Regulation is becoming clearer, and Paradigm wants to make prediction markets "Pro" active.

Byline: Yangz, Techub News

If you ask what the most important narratives for the first quarter of 2026—indeed, for the whole year—will be, then the prediction market is certain to take up a seat. And with major Wall Street players like JPMorgan moving in one after another, and regulatory rules becoming ever clearer, there is a player that wants to do something different.

Late yesterday evening, citing people familiar with the matter, Fortune reported that crypto venture capital firm Paradigm is developing a prediction market trading terminal aimed at professional traders and market makers, led by partner Arjun Balaji since the end of 2025.

From retail gaming to professional trading: one terminal that connects all liquidity

To understand the weight of what Paradigm is doing this time, you first need to see the real picture of prediction markets today.

Prediction markets are undoubtedly hot right now, but whether it’s Kalshi from traditional finance, Polymarket from crypto-native origins, or other new players, at their core they are all “islands operating independently.” Each platform has its own order book, its own liquidity pool, and its own API interfaces. If a professional trader wants to arbitrage across platforms, or diversify risk across different venues, they can only open five or six websites at the same time—switching manually, placing orders manually, and keeping records manually.

An even deeper pain point is that, on the product-logic side, prediction market platforms currently focus on “making it easy to place orders”—a clean interface and intuitive operation. While that’s friendly for regular users, for professional traders it’s far too basic. Professional tools that have long been standard in traditional financial markets and the crypto market—take-profit and stop-loss, algorithmic arbitrage, and multi-strategy portfolios—are almost entirely absent in the prediction market space.

For quant teams that are used to executing strategies with algorithms in crypto markets, the trading experience in prediction markets can only be described as “primitive.” And Paradigm’s entry point is precisely here.

What Paradigm wants to do is not only to address the surface-level pain of “liquidity fragmentation,” but to inject genuine “professional execution capability” into prediction markets—building a truly seamless battlefield for professional traders. In fact, Paradigm’s professional positioning has already been laying groundwork. Early this February, the company quietly launched a Paradigm Predictions data dashboard. Although it’s only a data visualization tool, it undoubtedly has paved the way for the current plan to build a professional trading terminal.

From single event to index trading: leveling up the gameplay

If a trading terminal solves the question of “how to trade,” then another line Paradigm is exploring is about answering “what to trade.”

In today’s prediction markets, you can only bet on whether “A will win” or whether “B will happen.” But Paradigm is trying to bundle multiple related events and explore the feasibility of creating prediction market indexes. Imagine that users no longer need to research each individual game; instead, they can directly trade a “sports season volatility index.” Or, rather than getting stuck on the outcome of a particular regional conflict, they can simply buy a “geopolitical volatility index.”

Of course, indexation brings not only richer ways to play, but also a structural change in the market itself.

For retail users, indexation lowers the threshold for research and decision-making—there’s no need to judge the outcome of any specific event; you only need to grasp the overall trend. For institutions, indexes provide a tool to hedge macro risk. When political uncertainty becomes the primary source of risk for an investment portfolio, institutions can hedge via a “political volatility index” rather than trying to bet on the outcome of every election.

From speculation to hedging, from gambling to insurance—this is the real transformation indexation brings to prediction markets. It can help prediction markets move beyond the childish appeal of “a betting bazaar,” starting to resemble a genuine “asset class.”

In addition, it’s worth noting that Paradigm is also considering establishing an in-house market-making division. As early as late 2024, Paradigm had been researching automated market maker algorithms specifically for prediction markets (pm-AMM). If Paradigm ultimately provides both terminal tools and indexed underlyings, and also personally enters to make markets, then at that point it will effectively recreate a “Goldman + Bloomberg” kind of joint entity in the prediction market space.

What’s the confidence behind it: Balaji’s quant DNA tightly bound to Kalshi

There are two key factors supporting Paradigm’s series of initiatives.

First is the quant DNA of the project’s lead, Arjun Balaji. Before joining Paradigm, Balaji was not a typical venture capital analyst, but an independent macro researcher active on the boundary between Wall Street and crypto. He has long provided crypto derivatives pricing models to hedge funds in New York and deeply understands the “neatness” professional traders have regarding liquidity depth and execution efficiency. In other words, this isn’t just a developer “who understands crypto” building an app; it’s an expert “who understands financial market infrastructure” reconstructing trading tools.

Second is Paradigm’s deep binding with Kalshi. Paradigm co-founder Matt Huang currently serves as a member of Kalshi’s board, and amid Kalshi’s valuation surge over the past year, you can see Paradigm’s presence everywhere. Over the past year, Kalshi’s valuation jumped from $2.0 billion in mid-2025 to $22.0 billion in March 2026—an 11x increase in less than a year. Paradigm has been almost continuously in the room—leading in the Series C round, participating in Series D, leading again in Series E, and continuing to follow in the latest round. This kind of sustained adding of capital goes beyond ordinary financial investment—it looks more like a strategic, deep binding. And for the Paradigm terminal, this binding will translate into a base of liquidity backed by compliance.

If the former determines the ceiling of this terminal tool—after all, only people who truly understand trading can build a product that professional traders will actually use—then the latter sets its starting line: only compliant platforms that hold sufficient liquidity can support the terminal’s initial level of credibility.

Conclusion

With Arjun Balaji’s quant insights as the spear and Kalshi’s compliant liquidity as the shield, Paradigm plans to reshape prediction markets—from fragmented “a scattered gambling fair”—into a “new asset class” with depth, efficiency, and hedging functions, by building a professional trading terminal, exploring index-based products, and even personally getting involved in market making.

For Paradigm, this is both a strategic foothold by a crypto venture capital firm in an emerging track, and a long-term experiment into financial market infrastructure. The final ambition of this setup may not be limited to simply providing traders with a handy tool. When prediction markets have execution standards and product matrices comparable to those of traditional finance, their narrative will complete a fundamental leap—from “betting on event outcomes” to “managing macro risk.” At that time, the true counterpart for prediction markets will no longer be only gamblers, but global capital seeking to hedge uncertainty. 2026 may be the pivotal year when this experiment moves from concept to reality.