The Rise of Attention-Based Finance and the Investment Potential of Prediction Markets

The financial landscape is undergoing a paradigm shift as attention-based finance emerges as a new asset class. Prediction markets, once dismissed as speculative novelties, are now evolving into foundational infrastructure for pricing attention assets-quantifying human belief, cultural trends, and creator value. This transformation is driven by explosive growth in trading volumes, regulatory clarity, AI integration, and structural innovations in liquidity protocols. For investors, the intersection of these forces presents a unique opportunity to capitalize on the next wave of financial infrastructure.

Prediction Markets: From Speculation to Infrastructure

Prediction markets have transitioned from niche tools to mainstream financial infrastructure, with platforms like Polymarket and Kalshi leading the charge. In August 2024, Polymarket's trading volume surged to $473 million, a 60-fold increase from August 2023. By October 2025, combined weekly trading volumes across Polymarket and Kalshi exceeded $2 billion, with Kalshi alone achieving $50 billion in annualized volume in 2025, up from $300 million in 2024. This growth is fueled by U.S. election cycles, sports betting, and a relaxed regulatory environment, including CFTC no-action letters that reduced operational risks.

Polymarket's strategic integration with traditional finance further underscores its institutional legitimacy. Its partnership with MoonPay and acquisition of derivatives exchange QCX-enabling CFTC-compliant operations in the U.S.-positions it as a bridge between decentralized and traditional markets. Meanwhile, Kalshi's CFTC-regulated status as a Designated Contract Market (DCM) has solidified its role in legitimizing prediction markets as financial instruments.

Regulatory Clarity and Structural Innovation

Regulatory developments in late 2025 have been pivotal. Polymarket's CFTC approval after acquiring QCX marked a reversal from its 2022 ban, signaling broader acceptance of prediction markets as derivatives infrastructure. Conversely, Kalshi faces legal headwinds, including a New York class-action lawsuit over unlicensed sports betting and Nevada court rulings requiring compliance with state gaming regulations as reported. These contrasting outcomes highlight the fragmented yet evolving regulatory landscape, where early adopters with robust compliance frameworks (e.g., Polymarket) gain a competitive edge.

Structural innovations are also reshaping the sector. Platforms like Opinion and Melee are pioneering permissionless market creation and AI-driven oracles to resolve macro events. Gondor introduces lending mechanisms, allowing traders to free up capital while maintaining exposure to long-term events. These advancements address liquidity constraints and fragmentation, transforming prediction markets into scalable infrastructure for attention-based finance.

AI Integration: The Agentic Revolution

Artificial intelligence is accelerating the maturation of prediction markets. Agentic AI systems now analyze real-time data, cross-asset correlations, and market flows to optimize trading strategies. For example, hedge funds like Sire leverage AI to process live sports data and generate alpha through onchain betting. In derivatives trading, machine learning models enhance pricing accuracy and risk assessment by processing unstructured data.

AI's role extends to the creator economy, where predictive models help creators anticipate audience behavior and optimize content strategies according to research. Platforms like Melee enable creators to launch viral prediction markets tied to their content, monetizing audience engagement through bonding curve mechanisms. This fusion of AI and attention-based finance creates new revenue streams for creators while generating high-quality data for market participants.

Creator Economy Derivatives: Monetizing Attention

The creator economy is a $37 billion ad spend sector in 2025, growing four times faster than traditional media. Prediction markets are now integral to this ecosystem, offering derivatives that price creator value and audience engagement. For instance, Melee Markets allows creators to launch niche prediction markets on trending topics, sharing in fees and driving viral participation. These markets function as attention assets, where probabilities reflect the perceived influence of creators and cultural trends.

Academic research on liquidity provisioning further underscores the potential of creator-driven derivatives. Third-party liquidity providers (LPs) facilitate trade by offering assets in exchange for fees, enhancing market depth and reducing slippage. Platforms like Gondor and Crypto.com | Derivatives North America (CDNA) are integrating institutional-grade liquidity, ensuring reliable trading for both retail and institutional participants.

Liquidity Protocols: The Backbone of Attention-Based Finance

Liquidity protocols are critical to the scalability of prediction markets. Cross-chain solutions like Eco Portal and Stargate Finance enable seamless asset transfers across 40+ blockchains, reducing friction in capital allocation. Liquid staking platforms such as Lido Finance and StakeWise further enhance capital efficiency by allowing users to stake assets while maintaining liquidity.

In the creator economy, Melee and Gondor are innovating with permissionless market creation and lending against open positions. These protocols address the unique liquidity challenges of attention-based assets, where value is derived from dynamic, event-driven demand. As of October 2025, prediction markets collectively generated $2.35 billion in weekly trading volume, a testament to the effectiveness of these liquidity innovations.

Investment Opportunities: Where to Allocate Capital

For investors, the structural innovations in prediction markets present three key opportunities:
1. Liquidity Protocols: Early-stage protocols like Gondor and Eco Portal are building the plumbing for attention-based finance. Their ability to scale cross-chain interoperability and institutional-grade liquidity will determine their long-term value.
2. AI Integration: Agentic AI models and predictive analytics platforms (e.g., Sire) are redefining trading strategies. Investors should prioritize projects with proprietary data pipelines and institutional partnerships.
3. Creator Economy Derivatives: Platforms enabling creators to monetize attention (e.g., Melee, Opinion) are capturing a growing share of the $1.3 trillion creator economy by 2033. These platforms benefit from network effects as creators and audiences coalesce around viral markets.

Conclusion

Prediction markets are no longer speculative tools but foundational infrastructure for pricing attention assets. With trading volumes surpassing $2 billion weekly, regulatory clarity in key markets, and AI-driven innovations, the sector is primed for institutional adoption. For investors, the next decade will be defined by those who recognize the structural potential of attention-based finance-where capital, information, and belief converge.