XO Market is betting that the future of prediction markets will not be one where a centralized team decides what people can trade, but rather the users themselves.
The startup just closed a $6 million seed round led by 20VC, Picus Capital, Coinbase Ventures, Venture Together and a group of angel investors including Australian cricket captain Pat Cummins, with co-founder Ali Habbabah saying the company is positioning itself as the “YouTube of prediction markets.”
“Major platforms like Kalshi and Polymarket are behaving more like Netflix today,” Habbabah told CoinDesk. “They decide which markets exist. We’ve completely flipped that model on its head. On XO, users create their own markets.”
This distinction is crucial. While existing businesses rely on in-house teams to curate and list prediction markets, XO allows individuals or companies to build their own markets, set parameters and fees, and let others trade in them. The result, Hababa says, is a wider range of, and often more creative, opportunities.
“We believe the future of prediction markets is user-generated. The best markets are not determined by the platform, but generated by the community.”
Mainnet beta launched
This model seems to be growing in popularity. Since launching mainnet testing in mid-November, XO has generated over $150 million in transaction volume, attracted over 30,000 users, and has over 600 user-created markets. Early pilots begin in April 2025 with the launch of the testnet.
“The metrics look strong because incentives are aligned,” Hababa said. “If you create a compelling market, people will trade on it. If you don’t, it will die.”
This dynamic of “natural selection” can be a double-edged sword. Even Hababa noted that competing user-generated platforms such as Nine Lives and Warm Protocol struggled to translate this concept into meaningful liquidity, resulting in an inactive market or minimal trading activity.
Habbabah said it’s unlikely that Polymarket or Kalshi would offer user-generated markets because they would need to find market makers willing to provide liquidity for thousands of different events and would have to change their infrastructure. He added that their current model is also very profitable.
Prediction markets are transcending their niche origins and gaining increasing attention from retail traders and institutional players as a new venue for pricing uncertainty. Advances in digital asset infrastructure have lowered barriers to entry, while a series of high-profile political and economic events have highlighted the limitations of traditional forecasting tools.
The result is increasing trading liquidity for contracts tied to real-world outcomes on a growing number of platforms, positioning prediction markets as a complement to emerging, lightly regulated traditional financial markets.
Total industry transaction value will grow approximately fourfold to more than $60 billion by 2025, up from approximately $15 billion to $16 billion the previous year, with platforms such as Polymarket driving this growth.
Specifically, Polymarket’s monthly trading volume soared from just $54 million in early 2024 to more than $2.6 billion in November of the following year, helping to push cumulative trading volume to more than $9 billion in a single year.
XO Vault
In addition to its core platform, XO is also preparing a new product aimed at “democratizing” another key part of the ecosystem: market making.
The upcoming “XO Vaults” will allow users to pool funds into strategies that provide liquidity for prediction markets, which have traditionally been dominated by specialist firms.
“On platforms like Kalshi or Polymarket, liquidity is controlled by a handful of large market makers,” Habbabah said. “With XO Vaults, anyone can become a market maker.”
Users will be able to create vaults related to specific strategies or categories (such as sports or politics) and earn fees by providing liquidity. Others can invest in these vaults, effectively earning market-making returns without actively trading.
“It’s similar to copy trading but provides liquidity,” Hababa said. “Based on what market makers typically earn, our target rate of return is around 8% to 10% per year.”
The product, expected to launch within weeks, may introduce new yield primitives in decentralized finance, combining prediction markets with passive income strategies.
“Not everyone wants to bet on the outcome,” Hababa said. “There are people who just want to make money from the activity around these markets.”
with interest
The XO team is also developing a feature that it says could reinvent how parlay betting works in prediction markets.
“This is not your typical copy-pasting sports betting bets into prediction markets,” Hababa said.
The feature, tentatively called “XO Stories,” is designed to give users more creative control by linking multiple outcomes beyond traditional parlay bets. While details are still limited, the team says pricing will be dynamic, providing a new perspective on prediction markets.
The system is built on XO Vaults and is designed to support complex multi-result structures without simply aggregating existing transactions. Hababa shared few details, but said it could reshape the way users think about and use parlays.
The best content comes from users
Despite increasing regulatory scrutiny of prediction markets, especially in the United States, Habbabah said he believes XO’s on-chain, permissionless design can offer advantages.
“Everything on XO is transparent and on-chain,” he said. “That puts us in a different category compared to more centralized platforms.”
For now, the focus remains on growth and product expansion.
As XO builds its ecosystem, Habbabah believes user-generated models will continue to set it apart.
“The internet has shown us that the best content doesn’t come from centralized studios, it comes from users,” he said. “We think prediction markets will follow the same path.”
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