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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 major platforms, such as Kalshi and Polymarket, act more like Netflix,” Habbabeh told CoinDesk in an interview. “They decide what markets exist. We have completely reversed that model. In XO, users create the markets themselves.”
The distinction is critical. While incumbents rely on internal teams to select and list prediction markets, XO allows individuals or companies to create their own markets, set parameters and fees, and allow others to trade on them. The result, Habbabeh said, is a broader and often more creative set of opportunities.
“We believe that the future of prediction markets is generated by users. The best markets are not decided by a platform, but rather emerge from the community.”
Mainnet Beta Launch
The model appears to be gaining ground. Since starting its mainnet beta in mid-November, XO has generated over $150 million in trading volume, attracted over 30,000 users, and seen over 600 user-created marketplaces. A previous pilot began in April 2025 with the launch of a test network.
“The metrics look strong because the incentives are aligned,” Habbabeh said. “If you create an attractive market, people trade in it. If you don’t create it, it dies naturally.”
This dynamic of “natural selection” can be a double-edged sword. Even Habbabeh notes that competitive user-generated platforms like Nine Lives and Warm Protocol struggled to convert concept into meaningful liquidity, resulting in inactive markets or minimal trading activity.
According to Habbabeh, it is 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 modify their infrastructure. Its 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 highlighted the limitations of traditional forecasting tools.
The result is a growing number of platforms where contracts linked 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 will roughly quadruple to more than $60 billion in 2025, compared to about $15 billion to $16 billion the previous year, and platforms like Polymarket drove much of that growth.
Specifically at Polymarket, monthly trading skyrocketed from just $54 million in early 2024 to over $2.6 billion the following November, helping push cumulative volume to over $9 billion in a single year.
XO Vaults
In addition to its main platform, XO is preparing a new product aimed at “democratizing” another key part of the ecosystem: market creation.
The upcoming “XO Vaults” will allow users to raise capital in strategies that provide liquidity in 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 vaults tied to specific strategies or categories, such as sports or politics, and earn fees by providing liquidity. Others can invest in those vaults, effectively gaining exposure to market-making returns without actively trading.
“It’s similar to copy trading, but to provide liquidity,” Habbabeh said. “We aim to earn returns of around 8% to 10% annually based on what market makers typically earn.”
The product, expected to debut within weeks, could introduce a new performance primitive in decentralized finance, combining prediction markets with passive income strategies.
“Not everyone wants to bet on the results,” Habbabeh said. “Some people just want to make money from activity in those markets.”
Parlays
The XO team is also developing a feature that it says could reshape how parlays work in prediction markets.
“It’s not your typical copy-and-paste sports betting prediction markets,” Habbabeh said.
The feature, tentatively called “XO Stories,” aims to give users greater creative control by linking multiple outcomes beyond traditional combinations. Although details remain limited, the team says that prices will be dynamic and offer new insight into prediction markets.
Built on top of XO Vaults, the system is intended to support complex multi-result structures without simply adding existing operations. Habbabeh shared some details, but suggested it could change the way users think about and use parlays.
The best content comes from users.
Despite increased regulatory scrutiny around prediction markets, particularly in the US, Habbabeh said he believes XO’s on-chain, permissionless design could offer advantages.
“Everything in XO is transparent and on-chain,” he said. “That puts us in a different category compared to more centralized platforms.”
For now, the focus is on growth and product expansion.
As XO develops its ecosystem, Habbabeh is confident that the user-generated model will continue to differentiate it.
“The Internet showed us that the best content does not come from centralized studios, but from users,” he said. “We believe prediction markets will follow the same path.”
Read more: AI Agents Are Quietly Rewriting Market Prediction Trading
