Prediction markets hit $64 billion in 2025 but reliance on centralized logins has created a critical security flaw
Prediction markets entered the mainstream in 2025, with a fourfold surge in annual buying and selling quantity as a handful of venues consolidated management over what’s quickly turning into an institutional-scale product, based on a new report from blockchain security agency CertiK.
The sector’s complete quantity rose from $15.8 billion in 2024 to $63.5 billion in 2025, the report stated, with exercise remaining elevated after the US election cycle and increasing into January 2026.
That persistence issues as a result of it means that election buying and selling behaved much less like a one-off spike and extra like an acquisition occasion that drew new customers into repeat conduct.
Notably, the week ending Jan. 18 set a file of about $6 billion in notional quantity, the report stated, reflecting how rapidly prediction markets have moved from area of interest crypto product to a high-turnover buying and selling venue.
However, CertiK’s central argument is that the subsequent section of development is colliding with an integrity downside that has much less to do with sensible contract exploits than with the layers that govern onboarding, the “actual” which means of quantity, and the mechanisms that decide who will get paid.
A 3-platform market with single-point failures
Three platforms now account for greater than 95% of world prediction market quantity, based on CertiK, and every is pursuing a completely different path to dominance.
Kalshi, which operates as a regulated venue in the US, is positioned because the compliance-first mannequin. Polymarket has captured the most important share of crypto-native and international participation.
Meanwhile, Opinion is the fast-growing entrant, utilizing ecosystem incentives to scale from successfully zero to roughly 30% market share in months, the report stated.
That focus turns operational points into systemic ones.
A failure at any main venue is not a contained occasion; it’s a market-wide belief shock that may unfold throughout liquidity swimming pools, knowledge feeds, and consumer balances, significantly as brokers and mainstream distribution start to deal with prediction possibilities like a new class of knowledge product.
CertiK factors to a December 2025 incident involving Magic.hyperlink, Polymarket’s third-party authentication supplier, as a preview of the place the sector is most uncovered.
Accounts utilizing Web2-style login strategies, comparable to electronic mail or social authentication, have been compromised, putting funds in affected accounts in danger, whereas the on-chain settlement layer remained safe.
In CertiK’s framing, it was an identification failure, not a settlement failure, and it highlighted the tradeoff of “Web2.5” onboarding: a smoother consumer expertise in alternate for centralized failure factors.
The lesson is uncomfortable for an business that markets itself on decentralization.
Prediction markets can help totally collateralized on-chain settlement whereas retaining the identical third-party dangers that plague typical fintech, together with authentication, account restoration, and platform-level entry controls.
When the tape lies but the chances nonetheless speak
The report additionally attracts a line between two ideas which are typically conflated in crypto markets: buying and selling quantity as a proxy for adoption and likelihood outputs as a proxy for data.
According to the report, incentive packages can inflate exercise with out essentially bettering the standard of forecasting alerts.
CertiK reported that wash trading remains widespread, citing analysis estimating that synthetic quantity reached as high as 60% on some platforms throughout peak airdrop-farming durations.
Such distortion can mislead outsiders, together with potential institutional customers, concerning liquidity depth and natural participation.
Yet CertiK argues the extra necessary query is whether or not the possibilities stay helpful even when the tape is noisy.
In the report’s view, wash trading has inflated volume metrics but has not but compromised value accuracy, and likelihood outputs have remained dependable for forecasting.
This creates pressure for platforms looking for to graduate to mainstream finance; they can place themselves as data utilities even when their exercise metrics are partly fabricated by incentives.
It additionally raises a tougher strategic resolution for the market leaders.
If distribution and credibility rely on data high quality, platforms could must develop into much less tolerant of behaviors that increase quantity in the quick time period but undermine the optics and belief required for institutional capital.
Chain migration and the brand new execution plumbing
Beneath the headline numbers, CertiK describes a structural rotation in how prediction market liquidity is executed.
Polygon retained “legacy dominance” by way of the November election cycle, the report stated, but BNB Chain quantity surged starting in late 2025, correlating with Opinion’s accelerated incentive rollout.
By the week of Jan. 19, CertiK stated BNB Chain exercise had successfully flipped the historic hierarchy, capturing the plurality of weekly flows and pushing off-chain settlement into a secondary place, whilst Kalshi posted file efficiency throughout NFL playoff buying and selling.
That shift is greater than a scoreboard for blockchain ecosystems. It adjustments who can take part, how trades are cleared, and which market buildings are possible.
CertiK notes that many on-chain venues are shifting from automated market makers to central restrict order books deployed immediately on high-throughput chains, a design that produces tighter spreads and extra acquainted mechanics for skilled merchants.
In follow, it additionally strikes prediction markets nearer to an exchange-like microstructure, with the attendant dangers of front-running and the MEV-style transaction-ordering disadvantages on public networks.
The oracle downside, the second the place “fact” turns into a payout
If there may be a single tail threat that unifies the sector’s development story, it’s decision, the step that converts possibilities into money.
CertiK characterizes oracle manipulation as the first technical assault vector as a result of market-resolution mechanisms immediately management fund distribution.
It additionally says ambiguous market definitions have already triggered disputes across all major platforms all through 2025, particularly the place political outcomes or contested official results create gray areas.
The report maps the primary decision fashions throughout the dominant platforms.
Polymarket is described as utilizing UMA’s optimistic oracle, in which outcomes resolve mechanically until disputed inside a problem window, with disputes escalating to UMA token-holder votes.
Kalshi is framed as utilizing centralized arbitration, with human arbiters resolving outcomes based mostly on authoritative sources.
Opinion is described as relying on consensus oracles, the place designated events should agree on an consequence.
Each mannequin carries a completely different belief assumption. Optimistic oracles might be quick for unambiguous outcomes but create edge-case vulnerability, together with the chance that enormous token holders could affect votes in low-liquidity disputes.
Centralized arbitration is predictable but requires trusting the platform operator. Consensus oracles distribute authority but nonetheless rely on the incentives and integrity of the designated resolvers.
As prediction markets scale, these tradeoffs develop into tougher to disregard.
The sector can tolerate occasional edge-case controversy when it’s a crypto curiosity. However, turns into a governance disaster when market possibilities start to seem in mainstream distribution channels or are utilized by establishments as inputs to threat choices.
The submit Prediction markets hit $64 billion in 2025 but reliance on centralized logins has created a critical security flaw appeared first on CryptoSlate.
