From a "pre-commitment" trade, understand the hottest Web3 track in 2025: prediction markets

1. Introduction

In early January Beijing time, a message circulated on overseas social platforms and among multiple crypto communities: the U.S. government took strong actions regarding the Venezuela situation, drawing significant attention from the international community. Almost simultaneously, a trading record on a decentralized prediction platform was rapidly amplified and discussed by the market.

Data shows that within just four days starting from December 27, 2025, an account on the prediction market platform Polymarket invested approximately $32,537 USD, continuously betting on the event that “Venezuelan President Maduro will step down before January 31.” Notably, this account concentrated large positions just hours before the related news was widely discussed externally.

At that time, the market’s overall pricing of the event’s probability was not high, around 6%. As the situation evolved and official statements from the U.S. were released, the price of the positions held by this account surged, ultimately realizing a paper profit of over $400,000 USD, with a return rate once exceeding ten times.

Whether this trade involved insider information remains to be further investigated by regulators and platforms. But it already raises a question—what exactly is this frequently mentioned Polymarket? And why did prediction markets become so popular in 2025?

This article will use this incident as a case to systematically introduce this rapidly expanding Web3 sector.

2. What are Prediction Markets? Why Can They “Aggregate Collective Wisdom”

Prediction markets are essentially mechanisms that use financial incentives to aggregate dispersed information.

Participants in prediction markets are required to use real funds to trade on the outcome of a certain event, expressing their judgment. As different opinions compete in the market, prices gradually converge to a level that reflects the “collective probability judgment.” This mechanism allows prediction markets to sometimes be closer to the true outcome than traditional surveys or subjective judgments.

This advantage was fully demonstrated during the 2024 U.S. presidential election. Platforms like Polymarket, representing prediction markets, provided probability estimates for the election results at several key moments, significantly outperforming traditional polling agencies. After the final results, their predictions were validated for accuracy.

With continued credibility accumulation, prediction markets have begun to be more widely referenced:

• Mainstream financial media (such as Bloomberg) directly cite their odds data;
• Search engines and AI Q&A products (like Perplexity) display prediction market results as reference information;
• Prediction markets are gradually shifting from “internal tools within crypto communities” to one of the sources of public information.

In terms of market size, the industry is also growing significantly. Several research institutions project:

• The total trading volume of prediction markets in 2025 may grow from about $900 million in 2024 to $40 billion;
• User base is expected to increase from approximately 4 million to 15 million;
• On the capital side, prediction markets are also highly recognized. By 2025, platforms like Polymarket and Kalshi have attracted a total of over $3.15 billion, dominating the industry. In October 2025, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, announced a strategic investment in Polymarket, pushing its valuation to the $8–9 billion range. Meanwhile, Kalshi completed multiple rounds of large financing, with investments from several top global institutions.

Under these multiple factors, prediction markets are widely regarded as one of the most representative Web3 sectors in 2025.

3. Prediction Markets ≠ Gambling: The Fundamental Difference Between Two Mechanisms

As prediction markets gain popularity, a common controversy has arisen: are prediction markets just “gambling in disguise”?

From a fundamental mechanism perspective, there are key differences.

1. Different Price Formation Mechanisms

Prediction markets adopt a market-based pricing logic. Prices are formed through the bidding of buyers and sellers in an open order book, with all transaction data auditable. The platform itself does not set probabilities nor bears outcome risks; it only charges transaction fees.

Gambling platforms, on the other hand, set odds internally, with their calculation logic hidden, and ensure long-term profitability through “house advantage.” The adjustment of odds is not aimed at discovering true probabilities but at controlling platform risk.

2. Differences in Function and Use Cases

The prices generated by prediction markets are essentially data products that can be used externally—for macro event judgment, policy expectation analysis, corporate risk management, and more. They can even influence media narratives and decision-making references in a reverse manner.

Gambling behavior mainly belongs to entertainment consumption. Its odds do not have spillover value and do not serve as a tool for information discovery.

3. Differences in Participant Structure

Liquidity in prediction markets comes from information-driven participants, including researchers, macro traders, data analysts, institutional users, etc. Their core goal is to exploit information asymmetries for arbitrage and price discovery.

Gambling markets’ liquidity mainly comes from ordinary consumers, who are more easily influenced by emotions and preferences, and do not prioritize information accuracy.

For this reason, prediction markets are often regarded as “information liquidity markets,” rather than traditional entertainment gambling.

4. Why Prediction Markets Will Explode in 2025?

Prediction markets are not a new concept; their theoretical foundation dates back to the last century. But their large-scale growth depends on multiple external conditions maturing in 2025.

First, a key breakthrough in regulation. The U.S. Commodity Futures Trading Commission (CFTC) has clarified the compliance positioning of prediction markets, explicitly categorizing them as commodity derivatives rather than gambling. This change allows prediction markets to be distributed through broader channels. After compliance, their coverage in the U.S. exceeds some traditional gambling businesses, reaching all 50 states.

Second, the restoration of institutional confidence and capital inflows. With clear regulatory boundaries, prediction market platforms rapidly expanded their financing channels, with multiple large funding rounds supporting product experience, liquidity, and risk control systems.

Third, the expansion of event categories. From macro political events to economic data, crypto industry events, and even sports competitions, prediction markets’ application scenarios have become more diverse.

Finally, technological maturity. On-chain settlement, automated market making, and AI tools for information analysis and trading assistance collectively lower participation and usage barriers.

These factors together made 2025 the year when prediction markets truly “broke out.”

5. Risks and Boundaries: Rational View of Prediction Markets

It is important to emphasize that prediction markets are not without controversy. The case of “early positioning” mentioned at the beginning of this article also reflects ongoing issues such as insider information, manipulation prevention, and compliance enforcement.

At the same time, it should be clarified that mainland China explicitly prohibits related prediction and disguised gambling activities. Ordinary users should not participate in any activities that violate local laws and regulations.

However, from a research and industry observation perspective, prediction markets as tools for information aggregation and probability expression still have value worth paying attention to and learning from, in terms of systems, technology, and product design.

For the Web3 industry, they offer a new direction: not solely centered on “asset speculation,” but on building data infrastructure based on information, decision-making, and real-world events that can be used by society. This may be the real reason why prediction markets have been widely discussed in 2025.