2026 Forecast Market: A Battle of Titans – 7 Differentiated Breakthrough Strategies for New Players

This article discusses seven key dimensions for differentiating competition in prediction markets, offering strategic advice for new entrants. Key points include:

Product quality: Differentiate through front-end user experience, API stability, and other areas to address weaknesses in established platforms.
Asset categories and market selection: Launch exclusive markets to attract users, combined with vertical strategies for amplified effect.
Capital efficiency: Use interest-bearing collateral and flexible margin mechanisms to improve traders' capital utilization.
Oracle and market settlement: Enhance oracle reliability and innovate mechanisms like human-machine hybrid systems to reduce risks.
Liquidity supply: Ensure liquidity through market maker recruitment, token incentives, or internalization models.
Regulatory compliance: Obtain regulatory qualifications to unlock new channels, such as adapting to state-level gambling rules in the U.S.
Vertical vs. horizontal strategies: Choose between vertical strategies focusing on integrated user experience or horizontal strategies emphasizing underlying infrastructure to compete effectively.

Author: Jake Nyquist , founder of Hook Protocol

Compiled by: Blockchain Knight

In 2026, major institutions launched new prediction markets.

The competition between NFT and perpetual contract exchanges over the past five years has made it clear that differentiated products can quickly seize market share.

While existing leading platforms possess advantages in liquidity and regulation, they are burdened with heavy product and technology debt, making it difficult for them to flexibly respond to the impact of new players.

So how should new entrants compete? In my view, predicting differentiated competition in the market revolves around seven key dimensions:

1. Product quality

The founding team can differentiate themselves in areas such as front-end user experience, API stability, development documentation, market structure, and fee structure.

Currently, most established platforms have obvious shortcomings: unreasonable tier settings, opaque fee rules, slow and unstable APIs, and limited order types.

A superior product experience, especially services for API programmatic traders, is a lasting core advantage that allows them to stand firm even against competitors with stronger channel capabilities.

2. Asset Classes and Market Selection

Currently, trading volume in the prediction market is mainly concentrated in sports betting and the crypto-native market.

The new exchange can launch exclusive marketplaces that other platforms cannot offer, and this advantage will be further amplified when combined with a vertical market strategy (point 7).

3. Capital efficiency

Capital efficiency determines the effectiveness of a trader's use of collateral, and there are currently two core focuses:

First, interest-bearing collateral: Instead of allowing idle funds to only earn government bond yields, it provides higher returns, similar to Lighter's support for using LP deposits as collateral and HyENA's USDE margin perpetual contract model.

Second, the margin mechanism. Due to gap risk, the market generally underestimates the leverage value of the forecast market, but the platform can provide limited leverage for continuous markets or implement portfolio margin for hedging positions.

Exchanges can also subsidize lending pools or act as market makers to internalize gap risk, rather than having users share the losses.

4. Oracles and Market Settlement

Oracle reliability remains a systemic weakness in the industry; settlement delays and incorrect results can significantly amplify trading risks.

In addition to improving stability, the platform can implement innovative oracle mechanisms such as human-machine hybrid systems, zero-knowledge proof-based solutions, and context-based AI-driven oracles, unlocking entirely new markets that traditional oracles cannot support.

5. Liquidity Supply

Exchanges cannot survive without liquidity. Feasible paths include: paying professional market makers, incentivizing ordinary users to provide liquidity with tokens, and adopting Hyperliquid's HLP aggregated liquidity model.

Some platforms can also fully internalize liquidity, emulating FTX's model of relying on Alameda as its internal trading team.

6. Regulatory compliance

Kalshi, leveraging its US compliance qualifications, has achieved embedded distribution with Robinhood and Coinbase, capturing retail traffic that Polymarket cannot reach.

There are still a large number of jurisdictions and regulatory frameworks available for deployment, and the compliance prediction market can unlock similar channels, such as adapting to the gaming regulatory rules of various states in the United States.

7. Vertical Strategy vs. Horizontal Strategy

Horizontal strategy: Similar to Hyperliquid in the perpetual contract field, it focuses on building top-level underlying trading infrastructure, inviting third parties to build front-ends and vertical scenarios, and encouraging ecosystem builders to add new markets and develop revenue-generating front-ends (such as Phantom) through proposals.

Vertical strategy: Represented by Lighter, it independently controls the front end, launches mobile applications, and creates a full-process user experience, focusing on integrated experience and direct connection with users.

Polymarket's resistance to deep embedded collaborations and Kalshi's open attitude are a direct reflection of the two strategic choices.