a16z Advisor: Only 1.3% of political contracts in the prediction market have liquidity; recommends introducing AI agents to provide liquidity.

Andy Hall, a professor at Stanford Graduate School of Business and an advisor to a16z & Meta, published an article on the X platform stating that his team has built a new dataset focusing 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% possessing sufficient liquidity. Kalshi and Polymarket rarely list identical contracts with the same rules, further fragmenting liquidity. Andy Hall proposes four improvements: First, list contracts on core issues and collaborate with independent institutions to define markets of social concern; second, pay market makers to inject initial liquidity into political markets; third, introduce AI agents to trade in areas where humans are not involved, generating price references needed by society; and fourth, establish unified definitions and settlement rules across platforms. Andy Hall believes these measures will attract traders hedging political risk, making prediction markets the truth-telling machines society needs.