Dialogue with OmenX Founder: Why does the prediction market need an evolution from "spot" to "derivatives"?

Author: momo, ChainCatcher

From being responsible for Huobi's DeFi incubation, to bringing Bybit's contract business from fifth in the industry to second globally, and then managing contract operations at Binance, OmenX founder & CEO James has almost experienced the most intense period of competition in centralized exchange derivatives. However, as the crypto derivatives market gradually matures, he chose to leave the familiar track and entered the prediction market.

At that time, Polymarket was rapidly breaking into the mainstream with the excitement of the U.S. elections, with monthly trading volumes exceeding hundreds of millions of dollars. This prediction market, which allows users to "buy Yes or No, and wait for results," returned to the center of capital and user attention. But in James's view, this was just the first stage of the prediction market's development. Next, users need a derivative asset that allows for more efficient trading, supports hedging, and is suitable for professional users, similar to the development path of crypto CEX from spot to derivatives.

Thus, OmenX was born. It is not a copy of Polymarket, but a leveraged prediction market reconstructed from the ground up. Users open positions with margin, trading the volatility of probabilities themselves, and can close positions, go long or short, or hedge at any time.

Recently, the OmenX mainnet has been launched. According to James, the trading volume in the first week after launch exceeded 43 million dollars, and the previous testnet phase accumulated 140,000 addresses. With the World Cup approaching, OmenX decided to enter real-time predictions in the sports sector (in-play), attempting to lower user education costs with this lower-threshold, more immediate feedback scenario, while avoiding direct competition with leading prediction market platforms like Polymarket and Kalshi.

The following is the transcript of ChainCatcher's interview with James, focusing on OmenX's product logic, future trends in prediction markets, and the current competitive landscape.

Why is the next stop for prediction markets "leveraged prediction markets"?

ChainCatcher: What are the logical differences between OmenX and traditional Yes/No prediction markets like Polymarket and Kalshi? Why do you emphasize that you are a "leveraged prediction market" rather than "the leverage of prediction markets"? How should ordinary users understand the difference?

James: We are currently leaning towards derivatives, and the most obvious feature is trading in a leveraged manner. Compared to Polymarket or Kalshi, the biggest difference is that you can buy and sell at any time, transforming from "buying a result and waiting" to trading volatility at any moment.

This needs to be broken down carefully. Polymarket actually allows you to sell shares before an event ends, but it is essentially a spot market where you buy shares of the Yes or No outcome, each requiring full collateral, and selling midway earns you the price difference of the shares.

In contrast, OmenX operates on a completely different logic. You are not directly buying outcome shares; instead, you open a leveraged position on an event using margin, trading the volatility of probabilities themselves. You can go long or short on the probability of a certain outcome, close positions, hedge, and adjust, occupying less capital while having greater risk-reward elasticity.

Therefore, we emphasize "leveraged prediction market" rather than "leverage of prediction markets" to distinguish this point. We are not simply adding a leverage multiplier to ordinary prediction markets; we are fundamentally transforming prediction events into a derivative asset that can be traded efficiently, supports hedging, and is suitable for professional users.

ChainCatcher: From the user's perspective, why does OmenX need a "leveraged prediction market" instead of continuing to use traditional prediction markets? What specific problems have you solved?

James: I think there are several important points.

First, the elasticity of returns will be greater. With the same capital, you can express a larger viewpoint. For example, there are NBA games now, followed by the World Cup, or a political event, or a Crypto event; using leverage can enhance your position's expressive power and open more positions.

Second, the impact on capital efficiency. For large funds or more professional trading users, they care a lot about the efficiency of capital utilization. For the same event, in different venues, there is no need to occupy the same amount of capital, and the saved money can be used for more predictions or other activities, which is very friendly.

Third, a more meaningful point is hedging, or providing insurance. On Polymarket, you clearly understand that the outcome either goes to zero or one, and you earn the price difference, but without leverage, going to zero means losing your capital. With leverage, you can use less capital on OmenX to create a reverse protection, essentially providing users with a more flexible trading and risk management tool.

So overall, we are creating a leveraged prediction market to shift users from passively waiting for results to actively trading. At the same time, we are gradually transforming the events and information that platforms like Polymarket and Kalshi are aggregating into assetized expressions, with the core being better performance at the trading level, including capital efficiency, hedging tools, and derivatives.

I believe this is the direction for prediction markets to be accepted as an asset by the public and to mature into a category similar to Crypto or traditional stocks.

ChainCatcher: Polymarket and Kalshi are both laying out derivative trading, and Hyperliquid is also entering the prediction market. Will they create products similar to OmenX?

James: Currently, their main focus is still on expanding market scale, user mindset, and compliance. They have also made some attempts, such as launching products similar to perpetual contracts, but they primarily focus on BTC and ETH perpetual contracts, not starting from their own prediction markets. Because they previously targeted U.S. users and were affected by compliance, they did not engage with perpetual contracts as early as the Asian market, so what they are doing now is essentially helping more U.S. users understand and know about perpetual contracts, fundamentally amplifying trading of existing Crypto assets from other exchanges or DEX.

As for Hyperliquid also entering the prediction market, everyone is indeed competing for the same market share. My view is that our positioning is to create the next stage of validated markets, making trading more efficient, somewhat like infrastructure, doing the work of "from 10 to 100." Meanwhile, Polymarket, Kalshi, and Hyperliquid can currently be understood as spot or fully collateralized (1x leverage) prediction markets. The competition is about who has more fresh prediction events and who has better liquidity.

Our difference lies in our hope that the spot market will first prosper, which will provide more targets for the derivatives market and enlarge the entire market. As of now, we are the first to create a leveraged, derivative-style prediction market, while other platforms remain at the spot or basic trading level. Whether they will also move in this direction in the future, I am not sure, but this is our entry point.

ChainCatcher: From a technical implementation perspective, what are the fundamental differences between OmenX and traditional prediction markets or derivatives platforms? What are your challenges and risks?

James: I think the biggest difference is that a leveraged prediction market cannot be directly compared to the perpetual contract market in Crypto. Although BTC and ETH also have volatility, they are continuously fluctuating, while prediction markets are event-driven, and probability changes often occur in jumps. For example, when a news item comes out, the probability of a certain outcome may instantaneously jump from one value to another, with no smooth transition in between.

This jump is not a big problem for fully collateralized spot models because your capital is fully placed there. However, once leverage is added, the concepts of margin and position come into play, and jumps mean that continuous settlement is not possible, easily leading to risks or even bad debts. Therefore, the hardest part is not "adding leverage" but figuring out how to manage these risks.

Specifically, there are several significant challenges:

• First is jump risk, caused by event-driven probability changes;

• Second is liquidity risk. Many events on Polymarket or Kalshi may be fresh, but liquidity is thin; when you trade, slippage can be significant, even driving prices close to 0 or 1;

• Third is the issues of liquidation, losses, and bad debts brought by leverage itself, and if there are black swan events close to the settlement of prediction events, the risks are non-linear and can amplify sharply.

So, creating a leveraged prediction market truly tests not whether you can add leverage, but your understanding and handling of risks, as well as the long-term accumulation of data and experience. This is the core threshold.

ChainCatcher: What are your current risk management solutions?

James: We have recently launched the mainnet. Before the launch, we went through about three months of Alpha and Beta version iterations, during which we made many adjustments regarding risk control and liquidation.

The currently launched version has a unified risk control and liquidation framework, and we have implemented many risk control limits based on market dynamics. It can be understood that, on the basis of traditional perpetual contract risk control in the Crypto field, we have added a deeper layer specifically targeting the risk control of leveraged prediction markets. Currently, there are very few platforms doing this kind of derivative-style prediction, and at this stage, we should be at the forefront in terms of risk control and risk management.

With the World Cup approaching, "in-play predictions" will become the core traffic entry point

ChainCatcher: What categories are currently the focus? Polymarket and Kalshi occupy a strong user mindset; what are your thoughts on user acquisition?

James: Currently, the categories with high product demand are mainly sports-related and political events that attract high attention, have strong volatility, and rapid information changes.

For us, a new platform needs to lower the understanding and education costs for users, and the sports sector is actually a more effective entry point. Compared to other categories, sports predictions have existed in the market for a long time, and fans naturally understand concepts like wins, losses, and odds. Moreover, there are many real-time changes during the matches, such as red and yellow cards or other situations, and this real-time information update is more concrete and easier to understand than macro or political events.

Therefore, we are currently focusing on sports-related categories. Coincidentally, with the World Cup coming up, we hope to guide users toward more mainstream trading behaviors through sports as a more natural entry point.

ChainCatcher: What specific preparations have you made around the World Cup or such sports events?

James: Currently, we have made two major preparations. The first aspect is the overall redesign of the sports section. If you look at the current interface of OmenX, it is more focused on trading behavior, resembling the leveraged trading experience of perpetual contracts, which is more friendly to professional trading users. However, if we want to attract more mainstream users from sports, the current interface is not very user-friendly for sports audiences. Therefore, we have made a comprehensive redesign of the sports section, aiming for a complete upgrade from viewing comprehension to ordering experience, making it easier for ordinary users to get started.

The second aspect is further segmentation within sports, where we found that predictions during real-time matches, which we call in-play prediction, actually have higher demand and are more suitable for expression in a leveraged manner.

For this real-time prediction, we have made revisions in risk control, ordering experience, and simplification of the trading process to make it easier for users to understand and operate, while also emphasizing timeliness. Moreover, real-time predictions require higher risk control, needing to protect users while optimizing the platform's risk control strategy. This iteration will be launched around the start of the World Cup.

ChainCatcher: How should we understand the concept of in-play leveraged prediction markets? Many events are indeed betting during the event; what do you mean by "demand during the process"?

James: You can take the NBA as an example. There are actually two different types of prediction events in the NBA. The first type is more static, such as "which team will win the NBA championship," which can be predicted long before the game starts, and the result will only come out at the end of the entire season; we call this a prop type (proposition) prediction event.

The second type is predictions for each individual game, such as who will win this game, by what margin, etc. These prediction events can be participated in before the game starts, and predictions can also be made at any time during the game; we call this in-play (real-time during the game) prediction. Its characteristic is that changes happen very quickly; a game lasts one to two hours, but during these two hours, information is constantly updated, and probabilities fluctuate rapidly. Therefore, compared to static championship predictions, in-play predictions have a higher demand for leveraged trading, and users need to adjust positions and engage in swing trading in real-time.

How to avoid direct competition with giants?

ChainCatcher: What is the current competitive situation you are facing? Are there many similar products on the market?

James: From what I understand, mainstream prediction markets have not yet created similar products. There are indeed some projects at the non-mainstream level doing similar concepts, but their approaches are more about borrowing processes or betting against users.

ChainCatcher: However, platforms like Polymarket and Kalshi have 90% of the funds directed toward them, forming a duopoly. How do you face the pressure from these giants?

James: This is indeed a problem we must face. But my thought is that if you do the same thing in the same era, it is difficult to compete with those giant platforms. We can now call it the "Polymarket era," where both capital and users are very enthusiastic about prediction markets, but where do we go next? From the perspective of trading platforms, trading volume is key. Once a leveraged or derivatives platform emerges, trading volume could grow exponentially, bringing the industry to the next stage.

So we need to do two things: first, differentiate; second, see what is needed for the next stage and get ahead. I can give an example from my experience in the exchange wars. In the early spot era, Binance and OKX were the largest, and later how did FTX and Bybit rise? They focused on a point and delved deeply into derivatives.

Additionally, for us, when users put their money with you for trading, risk is the top priority, and risk control requires data and experience accumulation. Whoever does it first will have a greater advantage.

ChainCatcher: How do you view the trend of exchanges like Binance also integrating prediction markets? Will startups have their own opportunities?

James: From a historical development perspective, this is definitely an inevitable trend. Whether in the crypto circle or other fields, at this point in time, retaining users or attracting new users is the most valuable thing. What Binance is thinking and what small platforms are thinking are actually the same: how to retain users and attract new users. As the hot products in the market continue to change, first it was Crypto, then it was prediction markets, and later it will be U.S. stocks on-chain; all platforms will passively or actively integrate different products, aiming to retain users and attract more users.

So from this perspective, the final product forms may become more homogenized. But large platforms have their advantages; they have traffic. Small companies or startups also have their opportunities; the key is to leverage their advantages and solve the problems they face.

What are the strategic plans after the mainnet launch?

ChainCatcher: You have been live on the mainnet for about two weeks; how is the data performance now?

James: In the first week after the mainnet launch, we added about 3,200 new users, with a trading volume of around 43 million, and an average of about 2,000 trading users per day, with an open contract volume of about 6 million.

Before the mainnet launch, we went through three months of Alpha and Beta testing, accumulating about 140,000 interactive addresses. Although these early data cannot prove that we have been very successful, they at least indicate that users are willing to pay for this kind of real leveraged trading and are willing to try it, which is a relatively positive signal.

ChainCatcher: What recent user incentive activities have you implemented?

James: There are mainly three directions. The first is called Hedge-to-Earn, focusing on hedging. We target existing users on Polymarket; if they have a position on Polymarket and register to interact with us, we will identify and grant them a hedging position. This is not a random airdrop but aims to convert existing prediction market users into their first trade on OmenX, allowing them to truly understand what hedging is; this approach is relatively novel in the market.

The second is the regular trading incentives common to new platforms, such as achieving a certain trading amount to receive tiered rewards.

The third is the experience position product, mainly targeting non-crypto or non-traditional Crypto users. Their education costs are relatively high, so we let the platform bear the capital and provide them with a position, allowing them to withdraw profits. In this process, users can understand concepts like margin, capital, leverage, position value, and liquidation without needing to deposit money. Additionally, with the World Cup starting next week and the sports section being revamped, we will also promote around the World Cup and related matches.

ChainCatcher: What is the trading cost for users on OmenX?

James: We have collected a lot of user feedback. Trading on Polymarket has relatively high fees, especially noticeable for Crypto users, typically reaching about three to four percent, and possibly higher for sports categories. This fee rate is very poor compared to centralized exchanges or even DEX.

OmenX's fee structure still follows the model of perpetual contracts, including basic fees for opening and closing positions and funding rates during the holding period. Our target is to set the fee rate between Polymarket and traditional contract trading platforms, and with our various user activities, the overall fee should be slightly lower than trading on contract platforms.

ChainCatcher: What are your product focus plans for the next six months?

James: There are three important directions.

First, continuous iteration of the sports section. In the two to three weeks since the mainnet launch, we have found that sports are a very important sector in terms of user acquisition and education costs, so updating and iterating the sports section and optimizing leveraged predictions for real-time sports events is a recent focus.

Second, integrating API and more advanced trading interfaces, which is essential for a professional trading platform.

Third, our ongoing philosophy is "Push to the limit," meaning that besides leverage, what other interesting products are needed for the next stage of prediction markets? For example, lending, wealth management, or other forms, which is also a direction we will explore and launch next.

ChainCatcher: What is your long-term vision?

James: From the perspective of OmenX, our long-term goal is to create an infrastructure based on event outcomes as assets. This has always been our core thinking: what is the next form of prediction markets? What do users need? What kind of products and facilities should be provided at that time? It may develop into an independent site with its own ecosystem, or it may start from a mobile perspective, allowing users to make predictions anytime and anywhere, or more online and offline combined approaches.

These are all some speculations and practical directions. In short, it revolves around the core of "prediction events as assets" to plan OmenX's long-term goals, creating what users truly need in the next stage.