Summary
- Wintermute, a prominent crypto market-making firm, has confirmed its role in supplying two-sided liquidity to significant prediction markets.
- According to sources, the platforms involved are Polymarket and Kalshi, establishing a mechanical connection between the two.
- By serving as a liquidity provider instead of a bettor, Wintermute aims to narrow spreads and accommodate substantial trades.
Wintermute, a leading market maker in the cryptocurrency sector, announced on Friday that it is actively supplying liquidity to prediction markets.
This London-based company, which handles over $3.5 trillion in annual trading volume, disclosed in a blog post that it has been engaged in “quoting two-sided markets across event contracts on leading venues.”
An insider informed Decrypt that these venues include Polymarket and Kalshi, indicating that capital flows between the two platforms is designed to facilitate trading while minimizing significant price fluctuations.
Jake Ostrovskis, Wintermute’s Head of OTC Trading, characterized the liquidity profile for prediction markets as “early-stage,” which contrasts with the increasing demand for such services.
“For these markets to serve as a dependable real-time source of probability estimates, they require consistent two-sided liquidity,” he stated. “This depth tightens spreads, accommodates larger trades, and enhances the accuracy of market prices.”
This announcement reveals a fundamental mechanical relationship between the two firms, both competing in a developing market. Kalshi has consistently emphasized that it operates exclusively in the U.S., while Polymarket’s primary operations are based offshore.
Unlike bettors who wager on the outcomes of events, liquidity providers focus on facilitating trades and earning from the “spread,” which is the difference between buying and selling prices. In a casino context, they can be likened to card dealers instead of gamblers.
Wintermute asserted that its involvement in the prediction market realm transitions these platforms from mere “forecasting tools” to broader venues for trading event risk, enhancing the dependability of the probabilities displayed on Polymarket and Kalshi.
In separate news, the CFTC approved an order on Friday allowing Kalshi to introduce perpetual futures in the U.S. linked to Bitcoin’s price. Last year, Wintermute CEO Evgeny Gaevoy told Bloomberg that the company is focusing on expanding its presence in the U.S.