a16z advisor: Only 1.3% of political contracts in prediction markets have liquidity, suggests introducing AI agents to provide liquidity

According to Odaily, Andy Hall, professor at Stanford Business School and advisor to a16z & Meta, stated on the X platform that his team has established a new dataset focused on political prediction markets, liquidity, and settlement rules. The research found that the vast majority of political contracts in prediction markets lack activity, with only 1.3% of contracts having sufficient liquidity. Kalshi and Polymarket rarely list identical contracts with the same rules, leading to further fragmentation of liquidity.

Andy Hall proposed four improvement suggestions: First, list contracts on core issues and cooperate with independent institutions to define markets of social concern; second, pay fees to market makers to inject initial liquidity into political markets; third, introduce AI agents to trade in areas where humans do not participate, generating price references needed by society; fourth, establish unified definitions and settlement rules across platforms. Andy Hall believes that these measures will attract traders seeking to hedge political risks and make prediction markets the truth machines that society needs.