XO Market Takes on Polymarket and Kalshi With User-Created Prediction Bets

XO Market wants users to build their own prediction markets. The platform just locked backing from 20VC, Picus Capital, and Coinbase Ventures, and it’s going after Polymarket and Kalshi with a different angle: let people craft and profit from their own forecasts instead of just betting on someone else’s options.

The bet here is pretty simple. Most prediction platforms give you a menu of markets someone else already set up. You pick, you bet, you wait. XO Market thinks there’s way more potential if users can spin up their own questions, set their own terms, and pull in liquidity from people who want to take the other side. It’s a shift from passive betting to active market creation, and the company thinks that’s how you unlock the real crowd wisdom buried in crypto communities and niche interest groups.

Vault Product Targets Market Makers

XO Market plans to roll out a vault product aimed at opening up market making to regular users. Market making usually sits with big financial players who can afford the capital and the risk. The vault will give smaller participants tools to provide liquidity and earn fees, kind of like how liquidity pools work in DeFi but tailored for prediction markets.

No launch date yet. The company didn’t say when the vault goes live or what the fee structure looks like. That’s probably deliberate—either they’re still tweaking the mechanics or they’re waiting to see how regulators treat prediction market liquidity providers. Either way, the vault is positioned as the core piece that makes user-generated markets viable. Without liquidity, even the best prediction question dies on the vine.

The vault is supposed to lower the barrier. Right now, if you want to make markets on Polymarket or Kalshi, you need serious capital and a decent grasp of odds-making. XO’s vault aims to pool funds from multiple users, spread the risk, and automate a lot of the pricing work. It’s a play to democratize something that’s been locked behind institutional gates for years.

Investor Backing Signals Confidence

20VC, Picus Capital, and Coinbase Ventures all put money into XO Market. That’s not just capital—it’s strategic weight. Coinbase Ventures brings crypto infrastructure knowledge and regulatory experience. 20VC and Picus have portfolios full of fintech and consumer platforms, so they know how to scale user-generated content models and navigate compliance minefields.

The backing matters because prediction markets sit in a regulatory gray zone. Kalshi fought the CFTC for years to get approval. Polymarket operates offshore and faced a $1.4 million settlement with the CFTC back in 2022. XO Market hasn’t said much about its regulatory strategy, but having Coinbase Ventures involved probably means they’re thinking hard about compliance from day one.

Investors don’t usually pile into prediction market startups unless they see a clear path to scale. The fact that three major names are backing XO suggests they believe the user-generated model can pull in a bigger audience than the current crop of platforms. Prediction markets have been around for decades, but they’ve stayed niche. XO’s approach could change that if it makes market creation easy enough for non-experts.

More context: CFTC Takes Wisconsin to Court in Fifth Prediction Market Turf War

User-Generated Markets Shift the Model

Most prediction platforms work like sportsbooks. Operators pick the events, set the lines, and users bet. XO Market flips that. Users propose markets, other users provide liquidity through the vault, and everyone shares in the upside if the market gets traction. It’s closer to how Reddit or Twitter work—the platform provides the rails, but users create the content.

The risk is obvious. User-generated markets could get weird, offensive, or legally problematic fast. Polymarket already deals with controversy around assassination markets and election bets. If XO lets anyone create anything, moderation becomes a nightmare. The company hasn’t detailed how it plans to handle that, but it’s a problem they’ll have to solve before scaling.

But the upside is big. Crypto communities want to bet on niche events that mainstream platforms won’t touch—protocol upgrade dates, token unlock schedules, DAO governance votes. XO Market could become the go-to for those bets if it can build the liquidity and keep the platform clean enough to avoid regulatory heat.

The model also taps into the creator economy trend. If users can profit from creating popular markets, not just from betting, that’s a new revenue stream. It’s similar to how YouTube or Twitch let creators monetize attention. XO is betting that prediction market creators will do the same—build an audience, spin up markets that audience cares about, and earn fees as liquidity flows in.

Prediction markets have struggled with adoption for years. Intrade shut down in 2013 after regulatory pressure. PredictIt operates under a no-action letter with strict limits. Augur launched on Ethereum in 2018 and never really took off. Polymarket broke through during the 2024 election cycle, but it’s still offshore and inaccessible to U.S. users without a VPN.

More context: Polymarket Pushes for U.S. Comeback as CFTC Chair Selig Stands Alone

XO Market’s user-generated approach could solve the adoption problem if it makes market creation simple and profitable. The vault product is the key piece—it has to work smoothly, price markets accurately, and give liquidity providers decent returns. If it doesn’t, the whole model collapses because nobody will bet on illiquid markets.

The company didn’t share a timeline for the vault launch or any details about how markets will be moderated. That leaves a lot of questions open. But the investor backing and the focus on user empowerment suggest XO Market is serious about carving out space in a crowded field. Polymarket and Kalshi have first-mover advantage, but neither lets users create markets at scale. XO does, and that could be enough to pull in a different kind of user—one who wants to build, not just bet.