Alliance’s co-founder Imran Khan seems to have targeted Kalshi’s recently launched Ethereum, XRP, and Solana perpetual futures products. He stated that new products on Kalshi could harm on-chain liquidity by attracting traders to closed ecosystems.
How Kalshi’s Products Could Have ‘Negative’ Impact On On-chain Liquidity
Khan didn’t mention the products by name, but his remarks were made days after Kalshi introduced crypto perpetual futures on ETH, XRP, and SOL. After receiving approval from the Commodity Futures Trading Commission (CFTC), Kalshi recently launched its perpetual trading products.
For context, Ethereum perpetual futures were launched on the regulated prediction market platform on June 4. This was followed by XRP and Solana perpetual trading on June 10.
In a post on X, Khan argued that Kalshi’s crypto derivatives operations could draw users and funds away from decentralized trading venues. He particularly mentioned Hyperliquid and Polymarket here, which offer exposure to on-chain liquidity.
“Personally, I think Kalshi’s products are net negative for on-chain liquidity,” Alliance’s co-founder wrote. He added that “every product they launch pulls trading liquidity off chain rather than onchain.”
Khan pointed out that the issue isn’t where trading is taking place, but where crypto settlement data and activity are ultimately going. He explained that decentralized finance (DeFi) is best when positions, liquidity, and users are on-chain. It’s because developers can integrate those systems into new applications and services.
“The second order effect is that less liquidity and user activity become composable with the rest of crypto,” Khan stated. He further noted that when activity exists directly on-chain, “other apps can build on top of it, integrate it, and create new products.” By contrast, he warned that “when state is offchain, those network effects are harder to capture.”
Other Risks Amid Hyperliquid Perp Approval
In recent weeks, Kalshi has been rolling out a number of crypto-related services. In addition to the ETH, XRP and SOL perpetuals, the company also got clearance for Hyperliquid perpetual futures contracts.
It also plans to launch Stellar (XLM), Dogecoin (DOGE), Shiba Inu (SHIB) and Hedera (HBAR) on its decentralized futures platform.
Khan also warned that regulated off-chain platforms could begin to mimic some of crypto’s most popular consumer financial products. “Over time, I suspect many successful onchain products could be replicated offchain via Kalshi or others,” he wrote.
Meanwhile, Khan recognized platforms like Kalshi can help mainstream perpetuities and prediction markets. However, at the same time, it’s not clear whether new liquidity eventually ends up in the decentralized markets or centralized ones.
On the regulatory front, Kalshi has bagged the U.S. CFTC backing. The regulator recently sued New Mexico for restricting sport prediction markets on Kalshi.
