Commentary: David Azubic, lead analyst at Blockquare
Prediction markets are no longer an experimental corner of crypto. The data now shows something solid: a financial category with stable volume, diversified participation and increasing institutional interest. Prediction markets are emerging as a new “arbitrage” for crypto traders.
According to a joint research report by Dune and Keyrock, the monthly conditional volume in forecast markets by the end of 2025 has increased from less than $100 million in early 2024 to more than $13 billion as the markets have diversified vertically.
Source: Dun
The implication is clear: Prediction markets have widened since their breakout. Despite recent regulatory actions aimed at curbing prediction markets, trading volumes have increased.
As the category matures, the underlying risk changes. Liquidity and user acquisition are no longer binding constraints; is trust.
An important layer of trust that is separate from regulation and maintenance is resolution.
Resolution becomes an obstacle
Solution architecture is important as the category expands into increasingly contentious domains.
Sports markets regularly involve serious cases surrounding officiality, timing and data sources. Political markets depend on definitions, certification procedures, and legal interpretation. Macro markets are subject to changes in methodology and release schedules.
As the surface area increases, so does the frequency of controversial results.
When the decision is opaque or discretionary, participation quietly declines. When a solution is controversial and economically viable, users consider it as a financial infrastructure.
This reflects the previous transition in crypto. Maintenance, performance, and disposal were once product features. Over time, they became system properties that institutions expected to be predictable and auditable.
The decision will undergo the same transition in the prediction markets.
Decision as infrastructure
Every prediction market makes a promise. Traders buy contingent claims based on a future outcome, and the system must convert these claims into a recoverable amount after the event occurs. If this conversion is slow, uncertain, or arbitrary, traders are pricing in price settlement risk. When the risk of a serious solution arises, serious capital concentrates only in a few of the headline markets and avoids the rest of the place.
This is why resolution architecture is becoming an important layer in the modern prediction stack.
In most designs, a market is created and associated with a specific oracle question with precise criteria for their solution. Users trade the resulting YES or NO tokens representing conditional claims. These claims are typically implemented using conditional character standards that can only be evaluated after the oracle has completed.
related to: Crypto.com Launches Independent Market Forecasting Program ‘OG’
Once the event has occurred, an answer is provided to the oracle. Optimistic oracle designs assume correctness by default, but require the proposer to post a bond. This bond creates financial costs for providing an incorrect answer.
Then the fixed problem window will open. During this period, anyone can argue with the issuance of bonds larger than the proposed result. Each problem increases the size of the bonds and increases the economic value of the manipulation.
If there is no dispute, the oracle completes the answer and the market is settled. If there is a dispute, the case goes to arbitration, where a decentralized jury decides the outcome and the decision is executed back to oracle mode.
From product features to trust anchors
As prediction markets mature into information infrastructures, reliance shifts away from interfaces and incentives toward solutions as architectures: sets of rules, bonds, problem windows, and arbitrage paths that somehow transform outcomes into executable settlements.
The next wave of growth will not be won by whoever gets the first traders in a headline event. It will be a winner for whoever builds the infrastructure where the solution is as reliable as the execution.
For builders, this changes key engineering and management priorities. The settlement rules should be clear before the markets become active, not refined after disputes arise. The design of the questions should minimize ambiguity during creation rather than relying on discretionary judgment in solving the problem. Bond sizes and issue windows should expand with open interest, not static as markets grow. Arbitration procedures should be predictable and enforceable. And resolution latency should be viewed as a key product metric, not an operational consideration.
When these properties are deliberately designed, prediction markets stop behaving like speculative products and function like financial systems that people rely on.
Commentary: David Azubic, lead analyst at Blockquare
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