Corporate treasuries are starting to bypass traditional hedging instruments and buy event contracts directly on prediction markets to offset losses from specific risks like tariff implementations. A trading desk could buy 'Yes' shares at roughly $0.10 per contract that pays $1 if the event occurs, needing about 1.11 million contracts to cover a $1 million loss at a cost of roughly $111,000. But the approach has a catch: order-book depth is thin enough that large positions can move the price, making the quoted cost unreliable.
Institutional volume spikes on Kalshi
Kalshi, one of the largest regulated prediction-market platforms, saw its institutional trading volume jump 800% over six months. The company completed its first customized block trade during that period. Combined monthly volume on Kalshi and Polymarket climbed from $7.2 billion in January to roughly $14 billion by June. The growth suggests that firms are testing the market as a hedging tool, not just a speculative playground.
Liquidity still a bottleneck for big hedges
Despite the volume surge, liquidity in the top Polymarket markets sits at only about $30 million total — far too shallow for a typical corporate hedge of several million dollars. Marcin Kazmierczak, a person familiar with the space, said the barriers for institutions are not access but liquidity depth, legal and counterparty clarity, and settlement integrity. Without deeper order books, a hedge intended to offset a $1 million loss might itself become a source of slippage.
Block trades and decentralized alternatives
Kalshi's first customized block trade signals that platforms are trying to accommodate large players who need to execute a big position without moving the market. Meanwhile, decentralized platforms like Hyperliquid are also drawing attention. Eneko Knorr pointed to Hyperliquid's adoption as evidence that decentralized trading tools are displacing parts of traditional infrastructure. But the decentralized model brings its own risks. Polymarket settles disputed outcomes through UMA's Optimistic Oracle, where any participant can propose and dispute resolutions, with the final decision coming from a token-weighted vote among UMA holders. A disputed oracle outcome could cause a hedge to not pay out as expected, undermining the entire purpose of the trade.
What comes next for the market
For prediction markets to become a serious hedging venue for corporations, liquidity needs to deepen well beyond the current levels. Settlement integrity and legal clarity remain open questions. The next test will be whether platforms like Kalshi can execute more block trades without price distortion, and whether regulators or market makers step in to provide the depth that institutional hedgers require.
