Oracle network Pyth Network has been selected as the resolution data source for Kalshi’s expansion into commodities markets, underscoring the growing focus on reliable pricing infrastructure in event-based trading.
Kalshi said on Wednesday that Pyth will supply real-time pricing data for its newly launched commodities hub, which debuted in April. The data will be used to determine how event contracts tied to commodity prices are settled.
The move serves as an example of a general trend in the world of prediction markets that strive to develop strong back-end infrastructure as they delve into complex asset types. Accurate and tamper-proof information sources play a critical role in ensuring a level playing field in financial derivatives markets.
What will Kalshi’s commodities hub include?
Kalshi’s hub for commodities enables users to trade contracts tied to underlying commodities, such as gold, silver, oil, copper, and other essential agricultural goods.
To offer real-time data without any potential obstruction, the price feeds offered by Pyth will act as the basis for deciding on the results of these contracts.
The decision is likely to give an impetus to Pyth Network in expanding its influence in the predictions market, where both Kalshi and competing platform Polymarket have opted for using it for delivering real-time data about equity and commodity prices.
The Pyth Network acts as a decentralized oracle network, which entails that it aggregates and supplies real-time pricing data from various sources to blockchain-enabled apps.
Moreover, based on recent reports, it appears that the platform has been investing in technologies to facilitate distribution of the proprietary financial information of institutional entities within the blockchain network ecosystem.
In the meantime, Kalshi has been utilizing the data streams to grow its commodity offering, while also considering additional expansion of the products, which could also include cryptocurrency-based derivatives. The firm is supervised by the U.S. Commodity Futures Trading Commission (CFTC) as a designated contract market and has federal approval to conduct derivative trading activities.
Kalshi sees heightened regulatory scrutiny
Kalshi’s expansion has not been without regulatory friction. Various U.S. state-level regulatory bodies have expressed their worries about some prediction contracts resembling illegal gambling or not being included in the scope of derivative instruments.
Thus, a legal controversy between state and federal regulators remains in play.
Recently, the Department of Justice and the CFTC requested a federal court to stop Arizona from applying its gambling laws to contracts issued by Kalshi, expressing support for federal regulation.
This legal battle is taking place amidst the fast growth of prediction markets, which attract the attention of crypto firms as well as more traditional finance market participants.