XO Market Raises $500,000 in Pre-Seed Funding, Launches Open Alpha

XO Market, a new prediction market platform, has successfully raised $500,000 in its pre-seed funding round. The round was led by Cyber Fund and Delphi Ventures, marking a significant milestone for the platform as it prepares to launch its open alpha this week. XO Market is designed to be a permissionless prediction market, allowing any user to create a market and set their own resolution criteria, collateral, and fees. This approach contrasts with other platforms like Polymarket and Kalshi, where markets are subject to approval from central gatekeepers.

One of the key innovations of XO Market is its AI-first oracle system. This system queries trusted APIs and uses algorithmic data retrieval and machine learning to determine objectively verifiable outcomes. In the rare event of a dispute, the resolution process involves a jury system where staked XO token holders are randomly selected to decide. Quadratic voting mechanisms are also implemented to prevent any single large token holder from dominating a market's outcome. This design aims to mitigate the "buy-the-truth" problem that can emerge on other platforms.

XO Market's liquidity model is another notable feature. It relies on an adaptive liquidity AMM, similar to Augur’s Liquidity-Sensitive Logarithmic Market Scoring Rule (LS-LMSR). This model allows creators to start markets with a small amount of capital and gradually build deep liquidity over time as trading volume increases. This approach is in contrast to Polymarket’s liquidity model, which relies on professional market-makers and often ignores niche markets until they are deemed worth the capital.

The launch of XO Market comes at a time when the prediction markets landscape is seeing significant growth. Both Polymarket and Kalshi have achieved unicorn status, with Polymarket raising $200 million at a $1 billion valuation and Kalshi closing a $185 million round at a $2 billion valuation. XO Market's innovative approach to prediction markets, combined with its permissionless nature and AI-first oracle system, positions it as a strong contender in this rapidly evolving space.