Prediction markets signal the probability of an event. Trading that probability is a different challenge entirely. The gap between an event outcome and the market's reaction creates basis risk—a risk that many market participants don't want to own. Galaxy's Head of Prediction Markets, Gil Wassermann, explores how Galaxy approaches risk management in prediction markets, drawing on frameworks developed in derivatives and volatility markets. Key takeaways: - Prediction markets provide signals, not perfect hedges. - Market trades can exist in event space or outcome space. Galaxy’s prediction markets desk allows eligible counterparties to transact in event space while managing the risk in outcome space. - Hedging activity can help connect prediction markets, crypto, and traditional finance. Read more: