Happy Thanksgiving everyone! Prediction markets are exploding with record volumes, billion dollar raises and new players shaking up the landscape. At the same time, Neutrl is opening up one of the strongest and least talked about yield opportunities in crypto, and early numbers are already turning heads. Plenty to be thankful for in the middle of this market chop, so make sure you give this piece a read.

Since my last update on prediction markets, the space has only gotten more competitive. New entrants want a slice of the rapidly growing pie, and the race for dominance now feels like a full-blown fundraising arms race. Kalshi’s valuation jumped to $11 billion after announcing a $1 billion round, following the NYSE’s $2 billion investment in Polymarket at a $9 billion valuation. Polymarket is already in early conversations to raise at a $12 billion to $15 billion valuation, suggesting that the market is heating up faster than expected.

On the activity side, weekly volumes have broken past previous all-time highs, hitting $3.68 billion two weeks ago, which is 2.4x above last year’s election peak. A major reason for this surge is a new entrant called Opinion Labs. Backed by investors like YZi Labs, the platform is already doing close to one third of total volumes across prediction markets.

However, most of this growth appears to be farming-driven. Opinion Labs is running a points program, and the data quickly shows it. One market alone, titled Will Satoshi move any Bitcoin in 2025, has done $1.28 billion in volume, which accounts for 32% of its total notional volume. It is not the type of market one would expect to generate that level of activity organically. Despite the volume surge, Opinion Labs only represents 14% of total open interest, another sign of inorganic participation.

Looking across categories, Polymarket has a more balanced distribution with Sports, Crypto, and Politics making up 38%, 28%, and 17%, respectively, of last week’s volumes. 

On Kalshi, Sports is the clear story, with 85.5% of weekly volumes coming from that category. Regardless of platform, it is now undeniable that Sports is becoming the primary driver of prediction market growth.

One protocol well positioned to benefit from this trend is Sire, which we covered in a research piece recently. Sire functions as an onchain sports betting hedge fund that captures inefficiencies in sports odds. It does this by using Score Subnet’s AI models that extract alpha directly from gameplay footage. In the last 32 days, the agent has executed $267.7K in volume on an initial vault size of $500K, with an average win rate of 58% and weekly returns on traded volume near 10%.

What is clear is that this market is just getting started. With FanDuel preparing to launch its own prediction product, the next phase will reveal whether this becomes a winner-take-all environment or whether different platforms carve out their own niches in Sports, Crypto and beyond.

— Kunal

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How Neutrl is cracking open the OTC market

Amid the ups and downs of the market, innovative protocols continue to emerge, and one that has stood out to me recently is Neutrl. It introduced NUSD, a synthetic dollar built on top of OTC arbitrage, funding rate inefficiencies and market neutral strategies. These sources of yield usually sit behind OTC desks or require constant hands-on management, but Neutrl wraps them into a product that everyday users can access.

Around 20% of deposits are deployed into hedged OTC positions. Neutrl acquires discounted locked tokens from early investors, foundations or teams, then hedges them in perps markets to capture the spread. Discounts vary depending on the lockup period, and can reach well above 50%.

This strategy benefits from the supply overhang in crypto markets and performs best in bearish periods when locked token holders under pressure are willing to accept deeper discounts just to access liquidity.

60% of the portfolio runs delta neutral strategies similar to the ones popularized by Ethena. These strategies hold spot exposure while shorting perpetuals to collect funding payments and basis spreads. The remaining share of the portfolio is held in liquid reserves such as USDC, USDT and USDe, which supports redemptions and cushions volatility.

The strategy seems to be working. Based on Neutrl’s first epoch results, the effective APY sits at 16.58%, compared with 5.12% on sUSDe. The difference comes from the OTC component, where the unrealized APR on deployed capital currently sits at 42%. OTC yield is proving to be a powerful source of return, especially in an environment where buyers can negotiate steep discounts.

The protocol launched on Plasma in October and the initial deposit cap of $50 million was filled in 20 minutes, which prompted the team to raise the cap by $25 million a few days after. Since removing the caps on Nov. 10, total deposits now sit at $125 million. Beyond yield, depositors accumulate XPL incentives, Neutrl Points and UpShift points. With NUSD set to integrate with Pendle, speculation around point values could increase TVL further.

Neutrl benefits from a team with experience across both TradFi and DeFi, and it is backed by STIX, one of the largest OTC desks in the industry. That relationship likely gives Neutrl preferred access to locked token flow. Still, no strategy comes without risk. The main concern is the management of the short legs of these trades, especially in the event of auto deleveraging on perp platforms, which could leave the protocol with a naked long position. There is also the question of how scalable returns will remain as TVL grows.

Even with these uncertainties, Neutrl is one of the more compelling protocols I’ve come across in the last six months, and one worth keeping an eye on as it scales.

— Kunal

1. Do Fundamentals Drive DeFi Valuations?

Greenfield Research finds that DeFi valuations are increasingly shaped by fundamentals rather than hype. Using multi-year data and machine-learning models, it shows that metrics like TVL, protocol fees and protocol revenue now explain the largest share of six-month returns, while social sentiment signals such as Twitter followers add little to no explanatory power. Fundamentals add almost no signal over one month but become decisive over six months, where fundamentals-only models have outperformed market-only models by more than 8% since early 2024. This shift reflects a maturing market that rewards real onchain cash flow and sticky usage. The lag between fundamentals improving and valuat catching up creates inefficiencies that disciplined investors can still exploit.

2. Prediction Markets for Culture, Perps for the Curve

Unwisecap argues that the Kalshi-StockX partnership marks a turning point collectibles, treating cultural markets with the same seriousness as financial ones. StockX’s resale data now feeds regulated prediction markets on Kalshi, letting traders bet on where cultural products actually clear instead of relying on vibes. Trove sees this as validation of its mission that culture is becoming an investable asset class with real data and proper market structure. Kalshi handles short-term event views, while Trove provides perpetual exposure to broader collectible indices, all grounded in shared data from StockX and niche sources. The result is a unified market where collectors and traders can finally trade culture with discipline and clarity.

3. AI is Rewiring the Economy

Fintech Brainfood argues that the real question is not whether AI replaces jobs, but how it rewires the economy. AI will cheapen knowledge work, squeeze middle class incomes and weaken consumer-driven growth. As routine tasks become automated, people shift from shopping to goal seeking, and businesses eventually earn revenue by improving user outcomes rather than pushing more products. This mirrors the impact containerization had on goods but applied to services, pushing platforms to align their incentives with human flourishing instead of advertising. The next economic era belongs to companies that scale high quality human experiences and measure value in improved lives rather than increased transactions.