XO Market, a startup that has just raised $6 million in seed funding led by 20VC, Picus Capital, Coinbase Ventures, Venture Together, and angel investors including Australian cricket captain Pat Cummins, is betting on user-generated prediction markets as the future of trading. Ali Habbabeh, co-founder, likens XO to the ‘YouTube of prediction markets,’ contrasting it with platforms like Kalshi and Polymarket, which he compares to Netflix due to their centralized decision-making regarding market offerings.
Unlike these incumbents that curate markets internally, XO empowers users to create and manage their own markets, setting parameters and fees. This approach fosters a wider array of opportunities, often more creative than those offered by traditional platforms. Habbabeh believes the best prediction markets will naturally emerge from community engagement rather than being dictated by platform decisions.
Since launching its mainnet beta in mid-November, XO has seen impressive growth with over $150 million in trading volume, attracting 30,000 users and more than 600 user-created markets. The initial testnet began in April 2025. Habbabeh attributes this success to aligned incentives: compelling markets attract traders, while less appealing ones fade away naturally.
However, this ‘natural selection’ model presents challenges as seen with similar platforms like Nine Lives and Warm Protocol, which struggled to achieve meaningful liquidity. Habbabeh notes that established players such as Polymarket or Kalshi are unlikely to adopt a user-generated approach due to the need for market makers willing to provide liquidity across numerous events and necessary infrastructure changes.
Prediction markets have broadened their appeal beyond niche circles, attracting both retail traders and institutional investors eager for new ways to price uncertainty. Advances in digital assets and significant political and economic events have highlighted traditional forecasting tools’ limitations, increasing interest in platforms trading contracts tied to real-world outcomes with growing liquidity.
Industry volume surged fourfold to over $60 billion in 2025 from approximately $15-16 billion the previous year, driven largely by Polymarket’s growth. On Polymarket alone, monthly trading rose from $54 million at the start of 2024 to over $2.6 billion by November.
XO is also introducing ‘XO Vaults’ to democratize market making, allowing users to pool capital into liquidity-providing strategies traditionally controlled by professional firms. These vaults enable individuals to earn fees and others to invest for exposure to market-making returns without active trading, aiming for yields of 8-10% annually.
Additionally, XO is developing ‘XO Stories,’ a feature intended to revolutionize parlay structures in prediction markets by linking multiple outcomes creatively. Built on XO Vaults, this system supports complex, multi-outcome configurations beyond traditional parlays, although details remain limited.
Despite increasing regulatory scrutiny in the U.S., Habbabeh believes XO’s transparent, permissionless design offers advantages over more centralized platforms. As XO expands its ecosystem and product offerings, it aims to continue differentiating itself through its user-generated model.
“The internet showed us that the best content comes from users,” Habbabeh stated, predicting a similar trajectory for prediction markets.