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The Fragmentation Problem

Prediction market liquidity is scattered across multiple platforms, each with its own:
  • Order books
  • User bases
  • Fee structures
  • Regulatory jurisdictions
This fragmentation creates inefficiencies that cost traders money.

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What is Liquidity?

Liquidity = the ability to buy or sell without significantly moving the price.
High liquidity means:
  • Tight bid-ask spreads
  • Large order sizes possible
  • Fast execution
  • Minimal slippage
Low liquidity means:
  • Wide spreads
  • Limited capacity
  • Slow fills
  • Price impact on trades

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The Current Landscape

  • Platform Breakdown
  • Liquidity Distribution
PlatformMarketsAvg. Daily VolumeUsers
Polymarket~7,000$50M+Global (non-US)
Kalshi~3,400$5M+US only
PredictIt~500$1M+US only
Metaculus~10,000N/AGlobal (no trading)

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Why Fragmentation Exists

Different jurisdictions, different rules.
  • Polymarket operates offshore, inaccessible to US users
  • Kalshi is CFTC-regulated, US-only
  • PredictIt has a no-action letter with strict limits
  • Each platform serves a captive audience
No interoperability between platforms.
  • Different APIs and authentication
  • Different order types and matching engines
  • No cross-platform settlement
  • Capital locked in each venue
Users follow users.
  • Traders go where liquidity is
  • Liquidity goes where traders are
  • First-mover advantage creates moats
  • Switching costs keep users locked in
Different user bases know different things.
  • Crypto users prefer Polymarket
  • Finance professionals use Kalshi
  • Academic forecasters use Metaculus
  • Each community has unique insights

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The Cost of Fragmentation

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Wider Spreads

Liquidity split across platforms = less depth on each = wider spreads. 
Unified Market:
BID 52¢ ████████████████████████ ASK 53¢ (1¢ spread)

Fragmented Market:
Platform A: BID 51¢ ████████ ASK 54¢ (3¢ spread)
Platform B: BID 50¢ ████ ASK 55¢ (5¢ spread)

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Price Discrepancies

Same event, different prices. Arbitrage opportunity = money left on the table.

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Higher Slippage

Large orders move the market more when liquidity is thin.

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Missed Opportunities

US traders can’t access the deepest liquidity (Polymarket). International traders miss regulated markets (Kalshi).

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How Matchr Addresses Fragmentation

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1. Unified View

See liquidity across all platforms in one interface:
Unified Orderbook

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2. Aggregated Depth

Understand true market depth by combining orderbooks: 
const depth = await matchr.getAggregatedDepth('market_id');

// Returns combined bids/asks across platforms
{
  bids: [
    { price: 0.52, size: 10000, platform: 'polymarket' },
    { price: 0.51, size: 5000, platform: 'kalshi' }
  ],
  asks: [
    { price: 0.53, size: 8000, platform: 'polymarket' },
    { price: 0.54, size: 3000, platform: 'kalshi' }
  ]
}

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3. Smart Routing

Route orders to the venue with best execution:

Analyze

Check prices and depth across all venues

Compare

Account for fees, slippage, and settlement

Route

Execute on optimal venue automatically

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4. Cross-Platform Matching

Identify equivalent markets to find the best price: 
Market A on Polymarket: 52¢
Same market on Kalshi:  55¢

→ Buy on Polymarket for better value

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Measuring Liquidity

Key metrics we track:
MetricDescription
SpreadDifference between best bid and ask
DepthTotal $ available within X% of mid
VolumeTrading activity over time
SlippageExpected price impact for order size

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Liquidity Score

We calculate a composite liquidity score (0-100) for each market: 
const liquidity = await matchr.getLiquidityScore('market_id');

// Returns
{
  score: 78,
  metrics: {
    spread: 0.01,
    depth_1pct: 50000,
    volume_24h: 125000,
    slippage_10k: 0.003
  }
}

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The Future: Liquidity Aggregation

Coming Soon: True liquidity aggregation with cross-platform execution.

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Phase 1 (Now)

  • View all markets in one place
  • See prices across platforms
  • Execute on single platform

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Phase 2 (Next)

  • Smart order routing
  • Automatic best execution
  • Split orders across venues

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Phase 3 (Future)

  • Cross-platform settlement
  • Unified margin
  • Single capital pool

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Best Practices

Check Multiple Venues

Always compare prices before trading. The best price may not be on your usual platform.

Consider Depth

For large orders, check orderbook depth. Thin markets have high slippage.

Use Limit Orders

Avoid market orders in fragmented markets. Set your price and wait.

Watch for Convergence

Prices tend to converge as resolution approaches. Time your trades accordingly.

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Next Steps

Multi-Wallet Setup

Manage wallets across multiple platforms.

Cross-Platform Routing

Execute at the best available price.