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 overseeing 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 ventured into 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 merely 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 moving from spot to derivatives.

Thus, OmenX was born. It is not a replica 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 the real-time prediction ( in-play ) segment of sports, 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 still leaning towards derivatives, with the most obvious feature being trading in a leveraged manner. The biggest difference compared to Polymarket or Kalshi 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 the event ends, but it is essentially a spot market where you buy shares of Yes or No results, 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 do not directly buy result shares; instead, you open a leveraged event position with margin, trading the volatility of probabilities themselves. You can go long or short on the probability of a certain result occurring, close positions, hedge, or adjust at any time, requiring less capital but offering greater risk-reward elasticity.

Therefore, we emphasize "leveraged prediction markets" rather than "the 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 do you solve?

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, if there is an NBA game, followed by the World Cup, or a political event, or a Crypto event, leverage can enhance your ability to express your position 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 user-friendly.

Third, a more meaningful point is hedging, or providing insurance. On Polymarket, you are very clear that the result 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.

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 by the public as an asset and to mature into a category similar to Crypto or traditional stocks.

ChainCatcher: Both Polymarket and Kalshi are laying out derivatives 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 perpetual contract-like products, but they primarily focus on BTC, ETH, and similar 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, which is still amplifying trading of existing Crypto assets from other exchanges or DEX.

As for Hyperliquid also entering the prediction market, everyone is indeed competing for 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 " 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 prosper first, which will provide more targets for the derivatives market and expand the entire market. As it stands, 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 fluctuate continuously, while prediction markets are event-driven, and probability changes often occur in jumps. For example, when a news event occurs, the probability of a certain result 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, which can easily lead to risks or even bad debts. Therefore, the hardest part is not "adding leverage," but 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, as many events on Polymarket or Kalshi may be fresh but have thin liquidity, leading to significant slippage when trading, 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.

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

ChainCatcher: So 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. Very few platforms currently offer such derivative-style prediction platforms, 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 prediction" 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, as well as political events that attract high attention, have strong volatility, and experience rapid information changes.

For us, a new platform needs to lower the understanding and education costs for users, and the sports segment 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 winning and losing, odds, etc. Moreover, there are many real-time changes during matches, such as red and yellow cards or other situations, and this real-time information update is more specific 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 towards 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 segment. If you look at OmenX's current interface, it is more focused on trading behavior, resembling the leveraged trading experience of perpetual contracts, which is more user-friendly for professional traders. However, if we want to attract more mainstream users from sports, the current interface is not very friendly for sports audiences. Therefore, we have made a comprehensive redesign of the sports segment, aiming for a complete upgrade in the experience from viewing and understanding to placing orders, 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 expressing in a leveraged manner.

For this real-time prediction, we have made revisions in risk control, order experience, and simplified trading processes to make it easier for users to understand and operate, while also highlighting timeliness. Additionally, real-time predictions require higher risk control, needing to protect users while optimizing the platform's risk control strategies. 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 events; what do you mean by "demand during the process"?

James: You can take the NBA as an example. The NBA actually has two different types of prediction events. 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 be known at the end of the entire season; we call this a prop type (proposition type) prediction event.

The second type is predictions for each specific 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 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 their 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 products similar to yours on the market?

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

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

James: This is indeed a problem we must confront. But my thought is that if you do the same thing in the same era, it is hard to compete with those giant platforms. We can call this 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 ourselves; 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 starts 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 is actually the same: how to retain users and attract new ones. 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 strengths and solve the problems they face.

After the mainnet launch, what are your strategic plans?

ChainCatcher: It has been about two weeks since your mainnet launch; how is the data performance now?

James: In the first week after the mainnet launch, we added about 3,200 new users, with trading volume around 43 million, and an average of about 2,000 daily trading users, 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 are very successful, they at least indicate that users are willing to pay for this real leveraged trading and are willing to try it, which is a relatively positive signal.

ChainCatcher: What user incentive activities do you have recently?

James: There are mainly three directions. The first is called Hedge-to-Earn, which focuses 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 usual trading incentives for new platforms, such as achieving a certain trading amount to receive tiered rewards.

The third is an experience position product, mainly aimed at non-crypto or non-traditional Crypto users. Their education costs are relatively high, so we let the platform bear the capital and give them a position; they can withdraw profits. In this process, users can understand concepts like margin, capital, leverage, and liquidation without needing to deposit money. Additionally, with the World Cup starting next week and the sports segment redesign, 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 quite a bit of user feedback. Trading on Polymarket has relatively high fees, especially for Crypto users, which can be around 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 design 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 that of 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, the continuous iteration of the sports segment. In the two to three weeks since the mainnet launch, we have found that sports are a very important segment from both user acquisition and education cost perspectives, so updating and iterating the sports segment 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, we have always promoted the concept of " 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 will the next stage of prediction markets look like? What do users need? What kind of products and facilities should be provided at that time? It could develop into an independent site with its own ecosystem, or it could start from a mobile perspective, allowing users to make predictions anytime and anywhere, or more ways that combine online and offline.

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.