Prediction markets are increasingly being presented as risk-management tools for small businesses, according to Andy Ross, head of institutional at Kalshi. Speaking at Avalanche Summit, Ross said prediction markets are becoming “a real risk management platform for small businesses” and allow people to “think about the risk that Main Street operators can manage” through event contracts.

He said this type of risk management was previously “only available for large institutions that could buy proxy assets or something tailored or customized.” For example, a small ice cream shop seeking protection from bad weather would no longer need to short consumer stocks or negotiate a weather-derivatives agreement with a bank. Instead, it could buy an event contract that pays out if rainfall reaches specified levels.

Regulated markets and blockchain rails

Kalshi is a CFTC-regulated designated contract market offering contracts tied to the Consumer Price Index, Federal Reserve decisions, gross domestic product, weather and travel disruptions. Its regulated status distinguishes it from offshore crypto platforms such as Polymarket on Polygon, which uses UMA’s optimistic oracle for settlement. The two models are moving toward a hybrid structure in which regulated order books provide compliance while blockchain rails support distribution.

Reuters reported on developments involving Polymarket.

Avalanche is positioned as part of that convergence. Its high throughput and customizable subnets can support event settlement and DeFi composability, allowing developers to incorporate event outcomes into treasury management and automated hedging for decentralized autonomous organizations. The broader premise is that any verifiable event could become a hedgeable risk accessible through an application programming interface or a crypto wallet.

Institutional infrastructure is also expanding. In September 2026, BMLL Technologies added Kalshi’s historical order-book data to a dataset used by systematic hedge funds. The integration allows institutions to backtest how event probabilities surrounding CPI and Federal Open Market Committee decisions change during the trading day, and to examine whether prediction-market pricing leads moves in equities, Treasuries and crypto perpetuals. BMLL described the data integration.

From theory to a conference hedge

In July 2026, NEXTPredict completed what it called the world’s first conference hedge through Kalshi. The transaction provided $3 million in coverage against mass flight cancellations. According to a GlobeNewswire release, NEXTPredict paid a $12,000 premium, with Susquehanna serving as market maker.

The example was highlighted in an Avalanche post on X:

Can prediction markets actually lower risk? At Avalanche Summit, Andy Ross, Head of Institutional at @Kalshi , shared how businesses are using the platform to hedge against uncertainty. Like an ice cream shop hedging against bad weather: pic.twitter.com/649RTo6VwM — Avalanche🔺 (@avax) October 9, 2026

https://x.com/avax/status/2108547244949717478?ref_src=twsrc%5Etfw

Event contracts can differ from conventional insurance because they are parametric and settle automatically when a specified trigger occurs, rather than paying only after a policyholder demonstrates that a loss has been incurred. Supporters say that structure can reduce moral hazard and lower barriers that have kept smaller companies from using CME weather futures or ISDA swaps, including low notional values and the complexity of arranging customized contracts.

The potential role for crypto is primarily structural. Prediction markets could make blockchain infrastructure for managing exposure to real-world events, rather than only a tool for speculation. Developers on Ethereum, Avalanche and Solana could use event data in treasury-hedging strategies.

Liquidity and regulatory questions

Liquidity remains concentrated around major events, including Federal Reserve decisions and elections. More localized markets, such as those covering weather in individual cities, remain relatively illiquid. Regulatory oversight is also developing. The CFTC is examining contracts that may resemble gaming and is raising questions about tokenized wrappers. The Wall Street Journal reported on the regulatory issues.

Oracle reliability and tax classification create additional challenges for on-chain implementations. The next phase will depend on the distribution of these products and the availability of data. As BMLL makes Kalshi’s historical data accessible to quantitative traders, more funds may evaluate strategies based on event probabilities.

Integrating prediction markets into fintech applications and small-business banking could eventually make hedging as routine as processing card payments. If that integration succeeds, prediction markets could follow the path of foreign-exchange hedging in the 1990s, when a tool used mainly by large corporations developed into a broader method for managing routine uncertainty.