Polymarket and Kalshi Valuations Soar Past $20 Billion, Will Competition Drive Creation of Dedicated Public Chain in 2026?

In the first quarter of 2026, the market track is predicted to reach a historic turning point. Two leading platforms, Polymarket and Kalshi, have been reported to be in talks for a new funding round at valuations of about $20 billion, nearly doubling from six months ago. Meanwhile, the competition in market share, ecosystem collaborations, and offline marketing has intensified into a fierce “arms race.” In this battle for future information pricing power, a more disruptive idea is fermenting within the industry: when traffic and liquidity reach a critical point, competition may force both sides to move from application layers downward, launching their own independent public chains to redefine the rules of the game.

How does the competitive landscape shift from products to ecosystems?

By the end of February 2026, the total nominal transaction volume of global prediction markets reached $127.5 billion, with Polymarket leading at $56.07 billion and Kalshi close behind at $44.71 billion, together accounting for nearly 80% of the market share. However, beneath this surface “duopoly” lie very different growth paths. Kalshi, leveraging compliance advantages and sports events, experienced explosive growth in monthly active users from 600,000 to 5.1 million in 2025. Polymarket, relying on its native crypto advantages, has built a moat around global political events and deep liquidity, with total users surpassing 2.31 million.

This differentiated and complementary advantage has shifted the competition beyond mere product feature iterations. From battling over the popularity of “South Park” episodes to launching pop-up “free food” stalls on Manhattan streets, their commercial battles have extended into cultural symbols and public perception. Deeper still, the contest is over channels: Kalshi has deeply integrated Robinhood as a core traffic gateway, while Polymarket collaborates with X (formerly Twitter), UFC, and Dow Jones to deliver data to mainstream media and entertainment scenarios. When traffic distribution becomes a new moat, existing centralized server architectures and payment channels are becoming invisible ceilings that restrict further expansion.

What is the core mechanism driving the move of these giants toward independent public chains?

Migrating core business from monolithic off-chain or Layer 2 applications to dedicated independent public chains may seem costly but is an inevitable upgrade in the competitive landscape. The core driver behind this is the fight for “full-chain control of transactions.”

First, to free themselves from the rent constraints of settlement layers. Currently, Polymarket is mainly built on Polygon, relying on Ethereum’s security and Polygon’s sequencer for transaction clearing. As transaction volume surges, the gas fees paid to Layer 1 and dependence on sequencers create an implicit “protocol tax.” Launching an independent public chain (e.g., based on Cosmos SDK or Avalanche Subnet) can enable an internal transaction fee cycle, capturing value within its own ecosystem.

Second, to develop customized oracle and clearing mechanisms. The core of prediction markets is determining the truth of event outcomes. Existing general oracle solutions face delays and disputes when dealing with complex political or sports events. An independent public chain allows the platform to embed official oracles as part of the infrastructure, enabling instant confirmation and tamper-proof settlement of event results, fundamentally resolving user complaints previously caused by contract settlement issues.

What structural costs will independent public chains entail?

Despite the grand vision, shifting from applications to public chains involves bearing the structural costs of the “fat protocol” era—liquidity fragmentation and security burdens.

The biggest challenge is the “cold start.” An independent chain must build its own validator network, requiring the platform to stake some liquidity assets (like USDC) to maintain network security, rather than using all assets for market trading. This leads to exponential increases in operational costs, shifting from paying cloud server fees to incentivizing consensus nodes. Moreover, the disconnection from Ethereum and other Layer 1 ecosystems may turn seamless cross-chain interactions into isolated “islands.” For Polymarket users accustomed to gasless experiences, managing native tokens to pay gas fees on a new chain will be a significant usability barrier. This is a trade-off: sacrificing user experience complexity for autonomous economic control.

What does this mean for the crypto industry landscape?

If either Polymarket or Kalshi successfully launches an independent public chain, it will fundamentally reshape the valuation model of the crypto industry. It signals that top-tier applications are no longer content to be tenants on public chains but aim to become “landlords.”

This will trigger a chain reaction. On one hand, it accelerates the return of the “application chain” narrative. As Bitwise’s chief investment officer states, the evaluation criteria for public chains are shifting from simple TPS metrics to how they reconstruct the information value chain. The emergence of prediction market public chains will demonstrate that applications with high-frequency trading and strong network effects can fully capture value at the protocol layer. On the other hand, it will force general-purpose chains like Ethereum and Solana to evolve. If top applications choose to “move out,” these chains will need to offer more attractive value capture mechanisms (such as fee rebates or MEV sharing) to retain core applications.

How might this evolve in the future?

Scenario 1: Kalshi’s compliance sidechain path. With its CFTC-regulated compliance status, Kalshi is more likely to launch a permissioned public chain targeting US institutions. This chain would support KYC/AML modules, only allowing compliant addresses to participate, and connect with traditional financial custody and settlement systems. It would not pursue full decentralization but focus on regulatory transparency and high performance.

Scenario 2: Polymarket’s crypto-native ecosystem chain. Polymarket might develop a fully decentralized, open public chain for global users, issuing a governance and gas dual-function native token. This chain would deeply integrate social and entertainment elements, expanding prediction markets from binary options to social prediction protocols, allowing anyone to create custom markets and pushing the concept of “information finance” to its extreme.

Potential risks and early warnings

Behind the grand narrative, deep risks in the public chain process must be acknowledged.

First, the reflexivity of regulation. Once issuing native tokens and building decentralized networks, regulators (especially the CFTC) may reclassify their nature—are they decentralized finance protocols or unregistered securities offerings? Polymarket is currently in legal disputes with Massachusetts over jurisdiction; pushing for a public chain at this stage could trigger stricter federal crackdowns.

Second, the fragility of economic security. Newly launched application chains experience volatile token prices, making them vulnerable to governance attacks or long-range attacks. Market transactions worth hundreds of millions of dollars depend on a new chain whose security has not been fully tested, posing significant operational risks. A major security incident could destroy user trust in the platform.

Summary

The duel between prediction market giants is evolving from a product competition to an ultimate infrastructure race. Whether Polymarket or Kalshi, with valuations surpassing $20 billion, launching independent public chains is no longer a question of “feasibility” but a strategic choice of “when.” This is driven by economic incentives to break free from underlying constraints and capture full value, as well as a hegemonic struggle to dominate future information financial standards. Despite the risks of regulation and security, 2026 may well mark a historic turning point where prediction markets transition from “applications” to “protocols.”

FAQ

Q1: Why do prediction market platforms want to build their own public chains?

A: Mainly to gain full control over the entire transaction process. By creating independent public chains, platforms can eliminate reliance on external chains’ gas fees, implement customized high-speed clearing mechanisms, and convert external costs into internal ecosystem value, building a deeper moat.

Q2: How are Polymarket and Kalshi performing currently?

A: As of March 2026, both are valued around $20 billion. Polymarket leads in total transaction volume with about $56.07 billion, especially strong in global political events; Kalshi has experienced explosive growth in users (over 5.1 million monthly active), with sports contracts accounting for over 80% of its trading volume.

Q3: How would launching an independent public chain affect ordinary users?

A: In the short term, it may increase usability barriers. Users might need to learn new wallet management and buy native tokens for gas fees. Long-term, user experience could improve with more flexible market creation, and users participating as network stakeholders could share in the ecosystem’s growth via governance tokens.

Q4: What are the biggest risks in building an independent public chain?

A: The main risks are regulatory and security-related. Issuing new tokens may trigger securities concerns; early-stage chains are vulnerable to attacks, and security breaches could threaten billions in user assets. Additionally, disconnection from existing major ecosystems may lead to user attrition.