Author: Yangz, Techub News

If you ask what are the most important narratives in the first quarter and even the whole year of 2026, prediction markets must have a place. At a time when Wall Street giants such as JPMorgan Chase are entering the market one after another and regulatory rules are becoming increasingly clear, there is a player who wants to play something different.

Yesterday evening, Fortune reported citing people familiar with the matter that crypto venture capital firm Paradigm is developing a prediction market trading terminal for professional traders and market makers, which will be led by partner Arjun Balaji from the end of 2025.

From retail games to professional trading: one terminal, opening up all liquidity

To understand the weight of Paradigm’s move, we need to first see the true picture of the current prediction market.

The current prediction market is not unpopular, but whether it is Kalshi originating from traditional finance, Polymarket native to encryption, or other new players, they are essentially isolated islands of "independent affairs." Each platform has its own order book, its own liquidity pool, and its own API interface. If a professional trader wants to arbitrage across platforms or spread risks between different platforms, he can only open five or six web pages at the same time, manually switch, place orders, and record accounts manually.

The deeper pain point is that the current prediction market platform's product logic focuses on "convenient ordering" - the interface is simple and the operation is intuitive. While this is a friendly consideration for the average user, the functionality is too basic for professional traders. Professional tools such as stop-profit and stop-loss, algorithmic arbitrage, and multi-strategy combinations that have long been popular in traditional financial markets and cryptocurrency markets are almost blank in the field of prediction markets.

For those quantitative teams who are accustomed to using algorithms to execute strategies in the cryptocurrency market, the current trading experience in the prediction market can only be described as "primitive". This is where Paradigm comes in.

What Paradigm wants to do is not only to solve the superficial pain point of "liquidity fragmentation", but also to inject real "professional execution capabilities" into the prediction market and create a truly convenient battlefield for professional traders. In fact, Paradigm’s professional layout has already laid the groundwork. In early February this year, the company quietly launched the Paradigm Predictions data dashboard. Although it is just a data visualization tool, it undoubtedly paved the way for the current professional trading terminal plan.

From single point event to index trading: gameplay to increase dimensionality

If the trading terminal solves the problem of "how to trade", then another line Paradigm is exploring is to answer "what to trade".

In the current prediction market, you can only bet on "whether A will win" or "whether B will happen." But Paradigm is trying to package multiple correlated events to explore the feasibility of creating a predictive market index. Imagine that users no longer need to study each specific football game, but directly trade a "Sports Season Volatility Index"; or no longer dwell on the outcome of a certain regional conflict, but directly buy a "Geopolitical Volatility Index."

Of course, indexation brings not only a richness of gameplay, but also a qualitative change in the market structure.

For retail investors, indexes lower the threshold for research and decision-making - there is no need to judge the outcome of a specific event, but only to grasp the overall trend. For institutions, indices provide a tool for hedging macro risks. When political uncertainty becomes a major source of risk for a portfolio, institutions can hedge with the Political Volatility Index rather than trying to bet on the outcome of every election.

From speculation to hedging, from gambling to insurance, this is the real change that indexation brings to prediction markets. It can make the prediction market break away from the low-level fun of "gambling" and start to move closer to a real "asset class".

In addition, it is worth noting that Paradigm is also considering setting up an in-house market making department. As early as the end of 2024, Paradigm was studying an automated market maker algorithm (pm-AMM) specifically for prediction markets. If Paradigm eventually provides both terminal tools and index targets, and also personally enters the market to make markets, then it will recreate a "Goldman Sachs + Bloomberg" combination in the prediction market field.

Where is the confidence: Balaji’s quantitative background and Kalshi’s deep binding

There are two key factors that support this series of layouts of Paradigm.

First is the quantitative background of Arjun Balaji, the project leader. Before joining Paradigm, Balaji was not a typical venture capital analyst, but an independent macro researcher active on the border between Wall Street and crypto. He has provided crypto derivatives pricing models for hedge funds in New York for a long time, and is well aware of professional traders' obsession with liquidity depth and execution efficiency. In other words, this is not a developer who simply "understands encryption" making an app, but an expert who "understands financial infrastructure" is reconstructing trading tools.

The second is the deep binding of Paradigm and Kalshi. Paradigm co-founder Matt Huang currently serves as a member of Kalshi’s board of directors, and Paradigm’s presence can be seen everywhere in Kalshi’s valuation jump in the past year. Over the past year, Kalshi’s valuation has soared from $2 billion in mid-2025 to $22 billion in March 2026, an 11-fold increase in just less than a year. Paradigm was present almost every step of the way - leading the Series C round, participating in the Series D round, leading again in the Series E round, and continuing to invest in the latest round. This kind of continuous raising has gone beyond ordinary financial investment and is more like a strategic-level deep binding. What this binding brings to Paradigm terminals will be a liquidity base guaranteed by compliance.

If the former determines the upper limit of this terminal tool - after all, only people who really understand trading can make products that professional traders are willing to use; then the latter delineates its starting line - only a compliant platform with sufficient liquidity can support the initial dignity of a terminal.

Conclusion

Using Arjun Balaji's quantitative insights as a spear and Kalshi's compliant liquidity as a shield, Paradigm plans to build professional trading terminals, explore indexed products, and even personally make markets, trying to reshape the prediction market from a fragmented "gambling market" into a "new asset class" with depth, efficiency and hedging functions.

For Paradigm, this is not only a strategic position for crypto venture capital institutions on emerging tracks, but also a long-term experiment in financial infrastructure. The ultimate ambition of this layout may be far more than providing traders with a convenient tool. When the prediction market has execution standards and a product matrix that are comparable to traditional finance, its narrative will also complete a fundamental transition from "betting on event outcomes" to "managing macro risks." By then, the real opponents in the prediction market will no longer be gamblers, but global capital seeking to hedge uncertainty. 2026 may be the watershed year for this experiment to move from concept to implementation.