XO Market raises $6 million, bets on user-generated prediction markets

XO Market has raised $6 million in a seed funding round as it looks to challenge established players by allowing users to create their own prediction markets.

The round included backing from Coinbase Ventures, 20VC, Picus Capital and Venture Together, as well as angel investors including Australian cricket captain Pat Cummins.

The startup is positioning itself as the “YouTube of prediction markets,” contrasting its model with rivals such as Polymarket and Kalshi, which rely on internal teams to decide which markets to list.

“Today’s major platforms like Kalshi and Polymarket act more like Netflix,” co-founder Ali Habbabeh told CoinDesk in an interview. “They decide what markets exist. We’ve flipped that model entirely. On XO, users create the markets themselves.”

XO allows individuals and companies to launch markets, set parameters and fees, and let others trade on them, a structure it says can broaden the range of tradable events and encourage more creative offerings.

“We believe the future of prediction markets is user-generated. The best markets aren’t decided by a platform, they emerge from the community,” Habbabeh said.

The platform has gained early traction, generating more than $150 million in trading volume since its mainnet beta launch in mid-November, with over 30,000 users and more than 600 user-created markets. An earlier testnet rollout began in April 2025.

“The metrics look strong because the incentives are aligned,” Habbabeh said. “If you create a compelling market, people trade on it. If you don’t, it dies naturally.”

Prediction markets have grown rapidly in recent years, with total industry volume exceeding $60 billion in 2025, up from about $15 billion to $16 billion the previous year.

Polymarket has been a major driver of that expansion, with monthly trading volumes rising from $54 million at the start of 2024 to more than $2.6 billion by November.

XO’s model, however, faces challenges around liquidity and market activity. Other user-generated platforms have struggled to scale, and incumbents are unlikely to adopt the approach due to infrastructure constraints and the need to support liquidity across a wide range of events.

The company is also preparing to launch “XO Vaults”, a feature designed to broaden participation in market making by allowing users to pool capital and earn returns from providing liquidity.

“On platforms like Kalshi or Polymarket, liquidity is controlled by a handful of large market makers,” Habbabeh said. “With XO Vaults, anyone can become a market maker.”

The product, which targets annual yields of around 8% to 10%, will enable users to invest in strategies tied to specific categories such as sports or politics.

“It’s similar to copy trading, but for liquidity provision,” Habbabeh said. “We’re targeting yields of around 8% to 10% annually based on what market makers typically earn.”

The company is also developing a feature called “XO Stories” aimed at enabling more complex, multi-outcome structures beyond traditional parlays.

“It’s not your typical copy-paste of sportsbook parlays into prediction markets,” Habbabeh said.

Despite increasing regulatory scrutiny in some markets, XO is betting its onchain and permissionless design will provide an advantage over more centralized platforms.

“Everything on XO is transparent and onchain,” Habbabeh said. “That puts us in a different category compared to more centralized platforms.”

As it expands its ecosystem, the company is focused on scaling its user-driven model.

“The internet showed us that the best content doesn’t come from centralized studios, it comes from users,” Habbabeh said. “We think prediction markets will follow the same path.”