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XO Market is betting that the future of prediction markets will not be dictated by centralized teams that decide what people can trade, but by the users themselves.
The startup, which just closed a $6 million seed round led by 20VC, Picus Capital, Coinbase Ventures, Venture Together and a group of angels including Australian cricket captain Pat Cummins, is positioning itself as the “YouTube of prediction markets,” according to co-founder Ali Habbabeh.
“Today’s big platforms like Kalshi and Polymarket behave more like Netflix,” Habbabeh told CoinDesk in an interview. “They decide which markets exist. We have turned that model around completely. On XO, the users create the markets themselves.”
The distinction is critical. While incumbents rely on in-house teams to curate and list prediction markets, XO allows individuals or companies to create their own markets, set parameters and fees, and let others trade on them. The result, Habbabeh said, is a broader and often more creative set of options.
“We believe the future of prediction markets is user generated. The best markets are not decided by a platform, they come from the community.”
Mainnet beta launch
The model seems to be gaining traction. Since the start of its mainnet beta in mid-November, XO has generated more than $150 million in trading volume, attracted over 30,000 users, and seen more than 600 user-created markets. An earlier pilot began in April 2025 with a testnet rollout.
“The goals look strong because the incentives are aligned,” Habbabeh said. “If you create a compelling market, people will act on it. If you don’t, it will naturally die.”
This “natural selection” dynamic can be a double-edged sword. Even Habbabeh points out that competing user-generated platforms such as Nine Lives and Warm Protocol struggled to convert the concept into meaningful liquidity, resulting in inactive markets or minimal trading activity.
Polymarket or Kalshi are unlikely to offer user-generated markets, according to Habbabeh, because they would have to find market makers willing to provide liquidity for thousands of different events and would have to change their infrastructure. Their current models are also extremely profitable, he added.
Prediction markets are gaining traction beyond their niche origins, attracting increased interest from both retail traders and institutional participants as a new venue for price uncertainty. Advances in digital asset infrastructure have lowered barriers to entry, while a series of high-profile political and economic events have underscored the limitations of traditional forecasting tools.
The result is a growing number of platforms where contracts tied to real-world outcomes are traded with increasing liquidity, positioning prediction markets as an emerging and lightly regulated complement to conventional financial markets.
Total industry volume jumped roughly fourfold to more than $60 billion by 2025, up from around $15-16 billion the year before, with platforms like Polymarket driving much of the growth.
On Polymarket specifically, monthly trading exploded from just $54 million at the start of 2024 to over $2.6 billion the following November, helping push cumulative volume to over $9 billion in a single year.
XO Vaults
Next to its core platform, XO is preparing a new product that aims to “democratize” another important part of the ecosystem: market making.
The upcoming “XO Vaults” will allow users to pool capital in strategies that provide liquidity across prediction markets, something traditionally dominated by professional firms.
“On platforms like Kalshi or Polymarket, liquidity is controlled by a handful of large market makers,” Habbabeh said. “With XO Vaults, anyone can become a market maker.”
Users will be able to create boxes tied to specific strategies or categories, such as sports or politics, and earn fees by providing liquidity. Others can invest in these boxes and effectively gain exposure to market-making returns without actively trading.
“It’s like copy trading, but for liquidity supply,” Habbabeh said. “We aim for a yield of around 8% to 10% annually based on what market makers typically earn.”
The product, expected to debut within weeks, could introduce a new primitive return in decentralized finance that blends prediction markets with passive income strategies.
“Not everyone wants to bet on results,” Habbabeh said. “Some people just want to profit from the activity around these markets.”
Parlays
The XO team is also developing a feature it says could reshape how parlays work in prediction markets.
“It’s not your typical copy-paste of sportsbook parlays for prediction markets,” Habbabeh said.
The feature, tentatively called “XO Stories,” aims to give users more creative control by connecting multiple outcomes beyond traditional parlays. While details remain limited, the team says prices will be dynamic, providing a new take on the prediction markets.
The system is built on XO Vaults and is intended to support complex, multi-outcome structures without simply aggregating existing trades. Habbabeh shared few details, but suggested it could reshape how users think about and use parlays.
The best content comes from the users
Despite increased regulatory scrutiny around prediction markets, particularly in the US, Habbabeh said he believes XO’s onchain, permissionless design could provide benefits.
“Everything on XO is transparent and onchain,” he said. “It puts us in a different category compared to more centralized platforms.”
For now, the focus remains on growth and product expansion.
As XO builds out its ecosystem, Habbabeh is confident that the user-generated model will continue to differentiate it.
“The internet showed us that the best content doesn’t come from centralized studios, it comes from users,” he said. “We think the prediction markets will follow the same path.”
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