The evolution of the crypto prediction market is fascinating because it was once considered a "falsifiable" sector. It took a decade to achieve Product-Market Fit (PMF), a process that exceeded market expectations. Sometimes, in the crypto space, drawing conclusions too early isn't advisable. The concept of prediction markets is not new; it has existed in the crypto space for a long time. The Gnosis project started development in 2015; and Augur officially launched in 2018. It is a decentralized prediction market platform based on Ethereum that allows users to create and predict future events and settle them using cryptocurrencies. Polymarket (based on Polygon) launched in 2020, but has remained marginalized ever since. Coupled with regulatory factors, it has struggled to survive. Polymarket's initial monthly trading volume was only a few million dollars; Augur's TVL plummeted nearly 80% after the 2020 election, falling from its peak to a few million dollars. The overall industry TVL peaked at around 7 million dollars, with monthly trading volume less than 100 million dollars. Regulatory pressure (such as the CFTC viewing it as "gambling") and imperfect (manipulable) oracles further hampered growth. The prediction market didn't truly explode until 2024. In particular, the 2024 US presidential election became a turning point. Polymarket's campaign prediction market saw trading volume exceed $2.7 billion, with the platform's monthly trading volume surging from $62 million in May to $2.1 billion in October, a more than 30-fold increase. The total notional trading volume for the year reached $16.3 billion, far exceeding the total of all previous years. Why did it take ten years to achieve PMF? First, the early crypto space faced technical and user experience barriers. While the concept of prediction markets seemed promising and demand immense, the user experience excluded the vast majority of users. For example, early versions of Augur were built on Ethereum's L1 platform, resulting in extremely high transaction costs—GAS was prohibitively high at the time—and slow confirmation speeds. Furthermore, ordinary users had to master wallets and complex interfaces, all of which presented significant learning curves. These high barriers corresponded to insufficient liquidity and user concerns about manipulation. Secondly, regulatory pressure has been constant. The U.S. Commodity Futures Trading Commission (CFTC) has intensified its scrutiny of prediction markets since 2018, classifying them as "gambling" or derivatives. During this period, Augur was fined for betting on sensitive events; Polymarket paid a $1.4 million fine and withdrew from the U.S. in 2022; and even its founder, Shayne Coplan (born in 1998), had his New York apartment raided by the FBI, who seized his electronic devices (but did not arrest him). This regulatory ambiguity has prevented institutional funds from entering the market. Regulatory pressure has made it difficult for liquidity to improve. Thirdly, there has been a shift in market narrative. In the crypto space from 2016 to 2018, most users focused more on speculation than practical tools; the DeFi/NFT boom from 2020 to 2023 distracted attention, resulting in a prediction market TVL of only $7 million. The lack of mainstream events hindered the accumulation of liquidity. Fourth, oracles are immature and easily manipulated. 2024 will be a turning point. As mentioned above, the US presidential election in 2024 will be a catalyst, but it will be much more than that. From 2024 to now, prediction markets have truly taken off. Besides Polymarket, the centralized prediction platform Kalshi has also emerged. In 2025, prediction market trading volume reached $27.9 billion (a year-on-year increase of 210%), with a weekly peak of $2.3 billion. The combined TVL of Polymarket and Kalshi exceeded $20 billion. Both were valued at tens of billions of dollars. Prediction markets suddenly became the darling of the market. So, what are the driving factors? In stark contrast to the obstacles encountered between 2015 and 2024, these obstacles were removed one by one, resulting in a qualitative improvement in various aspects such as user experience. First, there are changes in technological barriers and user experience. Polygon and Base L2 networks have reduced gas fees to mere cents and increased transaction speeds tenfold. Platforms like Polymarket have optimized their UIs, supporting one-click stablecoin betting and attracting non-crypto natives. Furthermore, DeFi has seen significant growth, providing deeper liquidity. For users, participating in prediction markets is now very convenient. Kalshi, a centralized prediction platform, has integrated with platforms like Robinhood, making user participation even easier. Second, regulatory changes. Following the 2024 US presidential election, regulators pushed for crypto-friendly policies. The CFTC approved regulated platforms like Kalshi in 2025. The SEC/CFTC clarified the legality of "spot commodity crypto," and stablecoin legislation passed Congress. Overseas, while Switzerland maintains a blacklist, the overall environment has shifted from hostile to supportive, with institutional funds flowing in (e.g., ICE invested $2 billion). Third, the market narrative has shifted. During this cycle, no single narrative has been particularly dominant. Instead, real-world applications have become the focus of market attention. Coupled with the catalyst of the 2024 election predictions, Polymarkets expanded its reach to areas such as sports, economics, and technology. Media promotion (such as coverage by CNN/Bloomberg) and the spread through social networks further fueled the boom in prediction markets. Fourth, both institutions and the community are pushing for it, with a16z actively participating and creating a narrative of "event-driven financial infrastructure." Community users are also actively participating, which has boosted TVL. Fifth, the prediction market has gradually evolved from "gambling" into a new type of signal, similar to a signal that provides real-time probability. An interesting conclusion can be drawn from the decade-long evolution of prediction markets: not all "falsified" sectors necessarily lack product-market fit (PMF); sometimes it's simply because conditions weren't yet ripe. This phenomenon is particularly evident in the crypto space. Due to the underdeveloped infrastructure in the first decade (expensive/slow/poor user experience, etc.), many attempts failed to reach ordinary users. Perhaps some of these sectors—such as Crypto Games, social networking, AI agents, depins, and digital identities—have already ended, but others will still have a chance to rediscover their potential.The evolution of the crypto prediction market is fascinating because it was once considered a "falsifiable" sector. It took a decade to achieve Product-Market Fit (PMF), a process that exceeded market expectations. Sometimes, in the crypto space, drawing conclusions too early isn't advisable. The concept of prediction markets is not new; it has existed in the crypto space for a long time. The Gnosis project started development in 2015; and Augur officially launched in 2018. It is a decentralized prediction market platform based on Ethereum that allows users to create and predict future events and settle them using cryptocurrencies. Polymarket (based on Polygon) launched in 2020, but has remained marginalized ever since. Coupled with regulatory factors, it has struggled to survive. Polymarket's initial monthly trading volume was only a few million dollars; Augur's TVL plummeted nearly 80% after the 2020 election, falling from its peak to a few million dollars. The overall industry TVL peaked at around 7 million dollars, with monthly trading volume less than 100 million dollars. Regulatory pressure (such as the CFTC viewing it as "gambling") and imperfect (manipulable) oracles further hampered growth. The prediction market didn't truly explode until 2024. In particular, the 2024 US presidential election became a turning point. Polymarket's campaign prediction market saw trading volume exceed $2.7 billion, with the platform's monthly trading volume surging from $62 million in May to $2.1 billion in October, a more than 30-fold increase. The total notional trading volume for the year reached $16.3 billion, far exceeding the total of all previous years. Why did it take ten years to achieve PMF? First, the early crypto space faced technical and user experience barriers. While the concept of prediction markets seemed promising and demand immense, the user experience excluded the vast majority of users. For example, early versions of Augur were built on Ethereum's L1 platform, resulting in extremely high transaction costs—GAS was prohibitively high at the time—and slow confirmation speeds. Furthermore, ordinary users had to master wallets and complex interfaces, all of which presented significant learning curves. These high barriers corresponded to insufficient liquidity and user concerns about manipulation. Secondly, regulatory pressure has been constant. The U.S. Commodity Futures Trading Commission (CFTC) has intensified its scrutiny of prediction markets since 2018, classifying them as "gambling" or derivatives. During this period, Augur was fined for betting on sensitive events; Polymarket paid a $1.4 million fine and withdrew from the U.S. in 2022; and even its founder, Shayne Coplan (born in 1998), had his New York apartment raided by the FBI, who seized his electronic devices (but did not arrest him). This regulatory ambiguity has prevented institutional funds from entering the market. Regulatory pressure has made it difficult for liquidity to improve. Thirdly, there has been a shift in market narrative. In the crypto space from 2016 to 2018, most users focused more on speculation than practical tools; the DeFi/NFT boom from 2020 to 2023 distracted attention, resulting in a prediction market TVL of only $7 million. The lack of mainstream events hindered the accumulation of liquidity. Fourth, oracles are immature and easily manipulated. 2024 will be a turning point. As mentioned above, the US presidential election in 2024 will be a catalyst, but it will be much more than that. From 2024 to now, prediction markets have truly taken off. Besides Polymarket, the centralized prediction platform Kalshi has also emerged. In 2025, prediction market trading volume reached $27.9 billion (a year-on-year increase of 210%), with a weekly peak of $2.3 billion. The combined TVL of Polymarket and Kalshi exceeded $20 billion. Both were valued at tens of billions of dollars. Prediction markets suddenly became the darling of the market. So, what are the driving factors? In stark contrast to the obstacles encountered between 2015 and 2024, these obstacles were removed one by one, resulting in a qualitative improvement in various aspects such as user experience. First, there are changes in technological barriers and user experience. Polygon and Base L2 networks have reduced gas fees to mere cents and increased transaction speeds tenfold. Platforms like Polymarket have optimized their UIs, supporting one-click stablecoin betting and attracting non-crypto natives. Furthermore, DeFi has seen significant growth, providing deeper liquidity. For users, participating in prediction markets is now very convenient. Kalshi, a centralized prediction platform, has integrated with platforms like Robinhood, making user participation even easier. Second, regulatory changes. Following the 2024 US presidential election, regulators pushed for crypto-friendly policies. The CFTC approved regulated platforms like Kalshi in 2025. The SEC/CFTC clarified the legality of "spot commodity crypto," and stablecoin legislation passed Congress. Overseas, while Switzerland maintains a blacklist, the overall environment has shifted from hostile to supportive, with institutional funds flowing in (e.g., ICE invested $2 billion). Third, the market narrative has shifted. During this cycle, no single narrative has been particularly dominant. Instead, real-world applications have become the focus of market attention. Coupled with the catalyst of the 2024 election predictions, Polymarkets expanded its reach to areas such as sports, economics, and technology. Media promotion (such as coverage by CNN/Bloomberg) and the spread through social networks further fueled the boom in prediction markets. Fourth, both institutions and the community are pushing for it, with a16z actively participating and creating a narrative of "event-driven financial infrastructure." Community users are also actively participating, which has boosted TVL. Fifth, the prediction market has gradually evolved from "gambling" into a new type of signal, similar to a signal that provides real-time probability. An interesting conclusion can be drawn from the decade-long evolution of prediction markets: not all "falsified" sectors necessarily lack product-market fit (PMF); sometimes it's simply because conditions weren't yet ripe. This phenomenon is particularly evident in the crypto space. Due to the underdeveloped infrastructure in the first decade (expensive/slow/poor user experience, etc.), many attempts failed to reach ordinary users. Perhaps some of these sectors—such as Crypto Games, social networking, AI agents, depins, and digital identities—have already ended, but others will still have a chance to rediscover their potential.