Will prediction markets become the next generation of financial instruments? However, from many perspectives, Wall Street has not yet participated on a large scale, mainly for several reasons. Shared by @silverfang88, I’ve summarized the key points for everyone: 1️⃣ Depth and liquidity issues Many hedge funds or large institutions, if they want to trade, actually have many more mature markets to use, such as U.S. stocks, ETFs, bonds, commodities, etc. If they have a view on a certain event, they can actually hedge Beta or make related trades through these markets, rather than necessarily betting directly on prediction markets. For them, the current scale of prediction markets is still relatively small, and the depth of many markets is actually insufficient; large amounts of capital entering could even directly affect prices. 2️⃣ Information asymmetry, also known as the mouse warehouse problem In such markets, it is actually easy for insider information to appear. For market makers or institutions, if you don’t know whether the counterparty has insider information, it’s actually very difficult to hedge your position, so many professional trading institutions tend to be more conservative about such markets. 3️⃣ Market positioning issues From a certain perspective, prediction markets do not necessarily need to be positioned as a traditional financial hedging tool. They are more like an information market + probability market, somewhat akin to a legalized casino. 😂 But for large financial institutions, they already have many mature financial tools, so they may not need to trade through prediction markets. Of course, there are other guests who hold different opinions. I wonder what everyone thinks? 👇