Prediction Market Kalshi to Supply Price Data for Crypto Oracle Stork

As a seasoned analyst with over two decades of experience in both traditional finance and the burgeoning world of cryptocurrencies, I find this latest development between Kalshi and Stork intriguing. It’s clear that prediction markets are gaining traction, not just in crypto circles but also among mainstream players like Robinhood.

Kalshi, a recently-emerged, American-regulated platform for predictive markets, is strengthening its connections within the realm of cryptocurrencies.

The company has consented to provide real-time pricing data to Stork Labs’ network of oracle services, which transfer information from external sources to blockchains and decentralized exchanges. This will enable developers to create cryptocurrency applications that are based on Kalshi’s markets, allowing traders to wager dollars on a variety of events such as political elections and educational statistics.

The partnership indicates increasing interest and excitement within the crypto community and related fields about prediction markets, particularly after Polymarket’s platform achieved significant success this year with massive trading volumes, primarily focused on the election. On Monday, the major U.S. stock brokerage firm Robinhood unveiled contracts for the presidential election.

To begin with, two companies situated in New York anticipate that Stork’s users will integrate Kalshi’s updates into continuous future contracts, a kind of investment agreement without an expiration date. Typically, these contracts, often referred to as “perps,” have been predominantly used for speculative wagers on cryptocurrency prices. However, with Kalshi’s data, such contracts can now be applied to predict the likelihood of various real-world events happening.

In simpler terms, Meredith Pitkoff, founder of Stork Labs, mentioned that one of the initial types of requests they received at Stork was about obtaining data directly from prediction markets. More specifically, this demand came from perpetual exchanges. A recent development shows an increasing interest among decentralized exchanges to list perpetual contracts on these prediction marketplaces.

dYdx and Vega are among the DEXs that have announced such plans in recent months.

In the future, Kalshi plans to offer resolution services for decentralized prediction markets using the Stork network. This means that they will make the ultimate determination as to whether a prediction was correct.

According to Jack Such, Kalshi’s head of market research, there are numerous issues related to resolution and functionality on decentralized markets, not only the user experience concerning disputes and similar matters. He emphasizes that if a prediction market protocol lacks adequate decentralization, it becomes susceptible to manipulation or control.

If an oracle service relies on token holders for dispute resolution and a group of them conspire, they could potentially manipulate the markets to their advantage and misuse funds contributed by everyone. Achieving adequate decentralization to prevent such collusion is challenging and time-consuming.

Kalshi’s regulation by the U.S. Commodity Futures Trading Commission offers a distinct advantage as a dispute resolver, as this oversight body holds Kalshi accountable for any questionable actions related to its resolution process. This regulatory oversight serves as an incentive for Kalshi to handle matters fairly and transparently.

To initiate our collaboration, I’m freely sharing Kalshi’s data with Stork’s network. However, as explained by Such, this partnership might serve a dual purpose: attracting additional traders to our centralized platform, which currently operates exclusively within the United States.

He mentioned that it’s likely many prediction market protocols using our data will eventually understand that it may be less complicated, if they are Americans and permitted to trade on Kalshi, to simply join Kalshi for trading. Noting that a prominent Wall Street firm, Susquehanna, is already trading on the platform, Such emphasized that we’ll never have liquidity concerns.

It’s still uncertain if prediction markets will continue to be widely used following the election. As per Pitkoff, Stork is engaging with numerous projects that aim to transform these markets into social interactions, allowing small groups of friends to establish their own prediction markets. Additionally, Stork has noted a significant interest in sports-related prediction markets.

Starting in March, Kalshi started offering prediction markets for the price of Bitcoin and Ether. However, it’s important to note that the resolution of these bets is still done using traditional currency, often referred to as fiat money.

For much of the year, Kalshi was excluded from participating in the election betting boom due to its legal battle with the CFTC over the approval of political event contracts. However, the company emerged victorious in court last month and started offering contracts for congressional and presidential races a short while later.