Bootstrapping liquidity on Kalshi

Kalshi’s hardest product problem is not listing more contracts, it is getting enough two way flow into each contract so traders can enter and exit without paying a big spread. In practice, that means a long tail market with only a few resting orders looks broken to users, even if the event itself is interesting. The result is a flywheel where liquidity piles into sports and major politics, while thinner categories stay shallow until outside distribution or aggregated routing pushes more order flow into them.

• Kalshi already shows category concentration. Internal research notes that just 7 categories drove 50% of volume, and the top 20 drove about two thirds of 2024 activity. That is what a young exchange looks like before enough traders and market makers show up across the full catalog.
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• The market structure makes liquidity visible. Kalshi runs a regulated central order book, so if there are only a few bids and asks, users immediately see thin depth and wider pricing gaps. By contrast, Polymarket uses global crypto rails and zero fees to pull in more flow, which helps it scale broad participation faster.
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• Kalshi’s answer is distribution. Broker integrations put Kalshi markets inside apps that already have users, and aggregators like Dome route orders across venues so one event can draw from multiple pools of liquidity. That matters because more volume, not just more listings, is what makes a prediction market usable.
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The next phase is a fight to become the liquidity engine behind many front ends, not just the destination app people open directly. If Kalshi keeps winning broker distribution and more routing layers connect into its order book, thin markets can gradually become tradeable, which expands the set of categories that generate real price discovery and eventually valuable data products.