From Elections to Everyday: Can the Clearing Company Redefine Prediction Markets?

📢 Sponsor | 💡 Telegram | 📰 Past Editions

Prediction markets are moving into the spotlight after years on the fringe. Platforms like Polymarket and Kalshi now command billion-dollar valuations and monthly trading volumes that rival mid-tier crypto exchanges. Venture capital has poured more than $216M into the sector in 2025 alone, while regulators in the US have started to ease their stance, opening the door for broader adoption.

But beneath the excitement, the data shows a more complicated reality. Volumes still spike around elections and then flatten, user growth has stalled, and the business model risks being seasonal. That tension is why The Clearing Company is entering the field. It wants to combine the openness of crypto with the credibility of regulation, betting that prediction markets can become a year-round product rather than a one-off election trade.

Key Takeaways

• Launched in August 2025 with a $15M seed round led by Union Square Ventures, the Clearing Company aims to build onchain, permissionless, and regulated prediction markets.

• Polymarket is valued as high as $9–10B and processed around $1B in August trading volume, while Kalshi, valued at $2B, handled $875M in the same month. Both remain the clear leaders in the sector.

• Kalshi has long been licensed under the CFTC, and Polymarket is re-entering the US through its acquisition of QCEX and a no-action letter. This marks the first real regulatory openness prediction markets have seen in years.

• More than $216M has been raised across prediction market deals in 2025, making it the strongest year yet. Top VCs including Paradigm, Founders Fund, and USV are betting that the sector has reached product-market fit.

• Data shows volumes and user activity surge during elections but cool quickly afterward. Unless platforms solve this “seasonal winner” problem, prediction markets risk staying niche despite big funding and attention.

What is The Clearing Company?

The Clearing Company is a new player in the prediction market space, looking to combine the accessibility of onchain platforms with the safeguards of regulation. It came out of stealth in August 2025 with a $15M seed round led by Union Square Ventures, joined by Haun Ventures, Variant, Coinbase Ventures, Compound, and a long list of angel investors.

The team includes people with backgrounds at both Polymarket and Kalshi, and that experience shows in how they describe their vision. They want markets that are onchain, permissionless, and regulated all at once, something neither of the current leaders has managed to pull off.

For the Clearing Company, prediction markets aren’t just about betting. They frame them as a form of live news, where prices surface forecasts faster than headlines. Traders are pushed to be honest, since being wrong has a cost.

Scaling, they argue, won’t come from complex mechanics but from making markets simple, fun to create, and liquid enough to keep people trading. There’s no set launch date yet, but the company is already being talked about as a direct challenger to Polymarket and Kalshi.

How the Clearing Company Stands Apart

The Clearing Company is trying to solve the biggest tension in prediction markets: the split between crypto-native platforms that move fast but operate in legal gray areas, and regulated exchanges that offer compliance but lack openness.

Its approach is to build markets that are on-chain, permissionless, and still compliant with regulatory standards. That means keeping the accessibility of Polymarket while adding the guardrails of Kalshi. 

The idea is simple:  if prediction markets are going to scale, they need to be fun to create, seamless to trade, and supported by new structures that unlock liquidity.

This focus on design sets the Clearing Company apart. Instead of leaning on clunky financial mechanics, it emphasizes ease of use and market creativity, aiming to make prediction markets feel less like derivatives and more like live, collective forecasts. Traders are encouraged to price outcomes honestly, since being wrong carries a cost.

Backing from Union Square Ventures, which has also funded Coinbase and Uniswap, signals that top investors believe a compliance-first, on-chain model can bring forecasting tools to a mainstream audience.

Competitive Landscape

Prediction markets have started to feel less like a curiosity and more like a real industry. The two clear leaders, Polymarket and Kalshi, are now raising money at valuations that would have been unthinkable a year ago. 

Polymarket has been approached at numbers as high as $9B to $10B, a jump from the $1B round it closed earlier this summer. Kalshi is close behind, lining up a fresh raise at around $5B, more than double its last mark.

The rivalry between the two shows up in trading volume. In August, Polymarket handled about $1B in activity, while Kalshi recorded $875M. The difference is less about size and more about approach. 

Polymarket runs on crypto rails, with markets operating on Polygon and settled in USDC. Kalshi is fully CFTC-regulated, settled in dollars, and requires traditional KYC.

This split between open but legally uncertain and regulated but closed models leaves room for a new challenger. The Clearing Company is positioning itself to take elements of both approaches and build a platform that works for a wider audience. 

With more than $216M raised across prediction market startups in 2025 alone, the field is quickly becoming crowded.

Polymarket 

Polymarket is the biggest name in crypto prediction markets right now. The platform counts over 1.3M traders, more than 36,000 markets, and upwards of 25M positions created. Those numbers put it well ahead of any rival.

The trading data shows how election cycles drive its business. During the 2024 US presidential race, Polymarket’s monthly volume spiked above $2.5B, peaking close to $3B in November. Activity fell back in early 2025 but has since stabilized, with volumes ranging between $800M and $1.2B through the summer. That consistency suggests Polymarket is building a durable base even outside of headline political events.

It has also started to attract political and financial heavyweights. Donald Trump Jr., through his fund 1789 Capital, recently invested and joined the advisory board. Founders Fund was already a backer, giving the company a mix of venture and public attention that few others in the space have managed.

Regulation has been a sticking point. In 2022 Polymarket paid a $1.4M fine to the CFTC and agreed to block US users. That experience pushed it toward compliance, and in 2025 it bought QCEX, a licensed derivatives exchange, for $112M to clear a path back into the American market.

On the activity side, Polymarket processed about $1B in volume in August 2025. Its model runs on Polygon, settles in USDC, and allows pseudonymous trading, which makes it easier to access globally than its regulated competitors.

Polymarket’s strength is scale. It has more users, more markets, and deeper liquidity than anyone else. The question is whether it can keep that lead while adjusting to the tighter rules that come with a US relaunch.

Kalshi

Kalshi has built its reputation as the regulated alternative to crypto-native prediction markets. In August 2025, the platform processed about $875M in trading volume, just short of Polymarket’s $1B for the same month. 

Its growth path is visible in the numbers: after spiking past $1.3B during the 2024 US election season, monthly activity dipped, then steadily rose again through 2025. By September 2025, Kalshi had returned to those highs, crossing $1.2B in volume.

The company’s expansion has been fueled by funding and institutional backing. In June 2025, Kalshi secured $185M in a Paradigm-led round that pushed its valuation to $2B. Alongside the capital, new hires focused on crypto strategy point to an effort to add digital asset features without giving up its regulatory edge.

Kalshi’s model is straightforward. Users deposit dollars and go through traditional KYC, which limits its global footprint but provides a level of legal certainty that resonates with US regulators, institutions, and retail traders who want clarity. This stands in contrast to Polymarket’s crypto-first, pseudonymous design.

The data makes the trend clear. While Kalshi still spikes around high-profile political events, it is now holding stronger baseline volumes in between. With new funding, rising activity, and CFTC oversight, Kalshi is positioning itself as the anchor of regulated prediction markets in the US, even as it begins to edge closer to the crypto ecosystem.

Others 

Beyond Polymarket and Kalshi, a handful of smaller platforms are carving out their own niches. Manifold Markets has grown popular among retail users by making it easy to create and trade play-money markets that double as social wagers, while also experimenting with crypto payouts. Insight Prediction focuses on real-money markets outside the US, appealing to traders who want simpler access than Kalshi but more legitimacy than offshore betting sites.

There are also experiments popping up across the crypto space. Coinbase and Robinhood have signaled interest in adding prediction features, while apps like Underdog and Crypto.com are testing sports-focused markets. None match the scale of Polymarket or Kalshi yet, but they show how quickly the idea of trading on future events is spreading.

However, the decentralized prediction market landscape shows just how dominant Polymarket has become. Over the last 12 months, it generated more than $16B in trading volume, dwarfing smaller players like BetSwirl ($1.2M) and newer protocols such as Azuro and SX, which have yet to register meaningful activity. 

The Data: Hype vs Reality

At first glance, prediction markets look like a booming sector. Polymarket is consistently processing close to $1B in monthly activity, with spikes above $2.5B during the 2024 U.S. presidential election. Kalshi has also touched $1.2B in volume, showing that the appetite is real when major political events dominate headlines.

But looking deeper into the data tells a different story. Polymarket’s number of active traders has fallen sharply since its January 2025 peak of nearly 460,000. By June, that figure was down to 242,000, and in September it hit its lowest point in nearly a year at just over 227,000. 

Volume has stayed flat at roughly the $1B mark because a smaller group of power users is trading larger sums. The average notional per account has grown from $2,700 in January to nearly $5,000 by mid-year, highlighting deeper engagement but not broader adoption.

The market creation side tells another story. Polymarket hit a record 13,800 new markets in August 2025, continuing a steady rise that has barely slowed since the platform’s launch. The breadth of markets is expanding rapidly beyond elections, but the user base engaging with them is shrinking. In other words, Polymarket is offering more choices than ever, but to fewer traders.

This disconnect captures the hype versus reality dynamic. New markets and billion-dollar valuations suggest explosive growth, yet the core data shows stalled user expansion and seasonal dependence on political cycles. 

Unless platforms like The Clearing Company, Polymarket and Kalshi can convert election-driven surges into sustainable user bases, prediction markets risk becoming a business that spikes every four years and flatlines in between.

Prediction Market Regulatory Tailwind

For years, regulation was the biggest obstacle to prediction markets. Platforms either operated in legal gray areas or narrowed themselves to fit within strict rules. That picture is starting to change.

In the US, the CFTC has shown more willingness to work with the sector. Kalshi has long operated as a fully licensed exchange, settling trades in dollars and requiring KYC. Polymarket, once forced out of the country after a 2022 enforcement case, has now secured a no-action letter through its acquisition of QCEX. This gives it a clear path back into the US market, something that would have been hard to imagine just a few years ago.

The shift is significant. Instead of regulation acting purely as a ceiling, it is starting to function as a catalyst for growth. Platforms that can meet compliance standards now have the chance to reach wider audiences without fear of being shut down. Investors have noticed, with hundreds of millions flowing into the space in 2025 alone.

Outside the US, the picture remains uneven, but the trend is similar. Some jurisdictions are beginning to explore frameworks that treat prediction markets less like gambling and more like financial instruments. If that continues, the sector could finally move past its reputation as a fringe experiment and into a more stable, regulated future.

The Clearing Company is aiming to build directly into this new regulatory moment. By designing an on-chain platform that still fits within compliance standards, it wants to combine the openness of crypto-native markets with the legitimacy of a licensed exchange. 

VCs Are Flocking to Prediction Markets

Venture capital has poured into prediction markets at a pace the sector has never seen before. According to The Block’s data, 2025 has already brought in more than $216M across 11 deals, far outpacing the $80M raised in 2024 and the $60M raised back in 2021.

The surge is being led by the two dominant players. Kalshi raised $185M in June in a round led by Paradigm, pushing its valuation to $2B. Polymarket is reportedly raising over $200M at a valuation as high as $9–10B, backed by Founders Fund and joined by high-profile supporters like Donald Trump Jr. and Elon Musk’s X. The Clearing Company, built by former Polymarket and Kalshi staff, has also attracted early attention with a $15M seed round led by Union Square Ventures.

What makes prediction markets more investable now is a mix of three forces. First is durable demand: volumes didn’t collapse after the 2024 election but shifted into sports, economics, and cultural events. Second is regulatory clarity: Kalshi’s court victory over election markets and Polymarket’s no-action letter for a US relaunch show regulators are now more open to working with the sector. Third is infrastructure maturity: from stablecoins to oracles, the technical building blocks are finally in place.

Investors see more than a niche gamble. Coinbase Ventures has called prediction markets a “killer onchain use case,” and Multicoin Capital says they are moving into “mainstream consciousness.” The combination of cultural visibility, regulatory approval, and proven liquidity is why top VCs are treating prediction markets as a core category rather than a side bet.

The Problem with Prediction Market: Is Prediction Market a Seasonal Winner?

The biggest question hanging over prediction markets is whether they can thrive outside the frenzy of US elections. History suggests the answer might be no.

Both Polymarket and Kalshi have shown the same pattern: activity spikes during politically charged moments, then flattens once the cycle ends. The November 2024 presidential election pushed Polymarket’s monthly volume as high as $2.6B, and Kalshi briefly topped $1.2B. 

But as soon as the election passed, volumes cooled and active trader counts dropped. Through much of 2025, both platforms have hovered just above $800M in monthly activity, strong, but a far cry from the peak.

This raises the question of product-market fit. People are eager to bet on elections because the outcomes are binary, high-stakes, and widely followed. That same energy is harder to sustain for one-off events like economic indicators, cultural moments, or niche sports. 

The data shows it: Polymarket keeps hitting records for the number of new markets, but the average trade size per user is shrinking, suggesting casual users don’t stick around once the headline events are over.

If prediction markets remain tied to election cycles, they risk being seasonal businesses rather than year-round platforms. For investors and new entrants like the Clearing Company, the challenge is clear: figure out how to build markets that people want to trade on every day, not just every four years.

Can the Clearing Company Make Prediction Markets Stick?

The challenge for any new entrant is obvious: how do you build a platform that people use year-round, not just when elections dominate the headlines? The Clearing Company believes the answer lies in product design and regulatory positioning.

First, the team is betting on simplicity and accessibility. Prediction markets are powerful, but most platforms still feel clunky or intimidating to casual users. The Clearing Company wants to make creating and trading markets “fun and seamless,” removing friction so the experience feels closer to a mainstream app than a derivatives exchange.

Second, it is leaning on regulation as an enabler rather than a constraint. By building on-chain but within a compliant framework, the company hopes to attract both crypto-native users and retail traders who would never touch a gray-market product. That dual positioning could broaden the audience beyond the usual election gamblers.

Third, the Clearing Company plans to tackle the liquidity problem with new structures designed to keep markets active between big events. If liquidity is consistent, traders are more likely to return, and markets can expand into categories like sports, entertainment, and macro trends that resonate outside politics.

It is still early days, and no launch timeline has been set. But if the Clearing Company can deliver on its vision, it may be the first platform to crack the hardest problem in this space: making prediction markets stick after the ballots are counted.

Our Take

Prediction markets have moved from curiosity to credible industry, but the data shows they still live and die by election cycles. Polymarket and Kalshi can post billion-dollar months, yet both struggle to sustain that energy once the spotlight fades.

The Clearing Company is stepping in at the right time. With fresh capital, a hybrid approach to compliance and crypto, and a focus on user-friendly design, it has a shot at making prediction markets more than a seasonal play. The question is whether it can build sticky, everyday use cases that keep people trading when there isn’t a presidential race on the line.

Until then, the hype around valuations will stay well ahead of the underlying activity.

If you enjoy reading this issue, please consider subscribing. It takes 1 minute of your time but it would mean the world to us 🙇

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.