Galaxy Digital and Jump Trading Eye Market-Making Roles in Prediction Markets
Galaxy Digital is actively exploring a market-making role on leading prediction-market platforms such as Polymarket and Kalshi. Galaxy’s chief executive, Mike Novogratz, described the firm as conducting small-scale experimentation with market-making on prediction markets, noting that broader liquidity provision is likely in the future. Meanwhile, Jump Trading has also begun quietly providing liquidity on Kalshi. This development signals a new era for the event-trading sector, as institutional trading firms bring traditional market-making technology and capital depth into what has been a retail-dominated, high-spread environment.
Prediction-markets platforms depend heavily on liquidity providers, as each yes contract must have an equivalent no counterparty. Without deep two-sided book support, spreads widen, slippage increases and high-ticket traders are discouraged. Galaxy is reportedly in talks to act as a regular counterparty on Polymarket and Kalshi and has already initiated small-scale tests. This marks a meaningful shift for the sector, which until recently lacked the scale and infrastructure needed to attract top trading firms. With Galaxy and Jump entering the space, the core plumbing of prediction markets is set to mature significantly.
Implications for platforms, liquidity and derivatives systems
The arrival of major institutional market-makers has several significant implications. Deeper liquidity typically reduces bid-ask spreads and improves execution quality, which can encourage larger institutional participation and higher transaction sizes. Weekly volumes on Polymarket and similar platforms have reportedly surpassed $2 billion, reflecting strong growth potential.
Institutional market-makers also bring advanced hedging models, risk management frameworks and cross-asset capabilities that prediction markets have historically lacked. For derivatives platforms and on-chain perpetuals venues, this shift may lead to evolving event-contract liquidity dynamics, tighter collateral modeling and reduced operational risk around execution and market-making.
Despite these potential benefits, execution risks and regulatory uncertainties persist. Market-makers are currently experimenting on a limited scale, and full-scale liquidity provision across a wide event-book remains untested. Prediction markets also continue to operate within a complex regulatory environment, with lingering questions around the categorization of certain events and cross-border access.
Broader ecosystem impact and sector evolution
The integration of institutional market-making into prediction markets could elevate the sector from a niche category to a more established segment of the financial landscape. Enhanced liquidity and reduced spreads may attract new users, including institutional traders and funds viewking exposure to event-driven outcomes.
For infrastructure builders, the evolution of prediction markets will increasingly hinge on the interplay between wallet flows, settlement rails, liquidity provisioning and margin models. As these platforms grow, sophisticated infrastructure will be required to support higher volumes and tighter spreads.
Looking ahead, key indicators to monitor include whether Galaxy and Jump expand their quoting activity, whether prediction-market platforms formalize additional partnerships with institutional liquidity providers and how these changes affect overall market structure. If institutional market-making becomes widespread, prediction markets may transition from high-volatility, thin-liquidity ecosystems to deeper, more efficient markets—creating both new opportunities and new challenges for the broader financial ecosystem.
