Prediction Markets Saw a Record October

Election Prediction

• With less than a week to go, Polymarket US political markets are seeing record activity ahead of the midterms. Daily trading volume surged to $18.6 million on October 28, with cumulative volume over $131 million.
  • Major elections worldwide have also contributed to the rise in volume. Presidential elections in Brazil drove volume on Polymarket’s international platform, accounting for nearly 80% of market share compared to US elections.
  • With US elections back in the headlines, this balance will likely shift back toward US election markets.
• Prediction markets as a whole have also increased in popularity. Cumulative volume across Polymarket’s international and domestic markets and Kalshi combined exceeded half a trillion dollars in October.
  • Adoption has primarily been in sports markets, where prediction markets often offer tighter spreads and real-time trading that traditional sportsbooks don’t. By volume, nearly all of the top prediction markets are sports-related.
  • However, despite sports dominating volume, other markets such as elections and economic data provide users with valuable information alongside polls and forecasts. The upcoming US elections will be another chance to see if prediction markets can out-predict the polls.

Morpho Closes in on Aave

• Morpho TVL has quietly risen to more than $11 billion, up almost 100% since the start of the year. Growth has been especially impressive, given that incumbent Aave is down nearly half its TVL this year, now sitting at $16 billion.
  • Aave suffered a particularly sharp TVL decline earlier in the year after the KelpDAO exploit, which saw attackers steal and use rsETH as collateral on Aave, leading to roughly $200 million in bad debt.
• Morpho, by contrast, has benefited greatly from onchain lending catalyzed by Coinbase’s borrow product. Morpho on Base increased TVL from $2 billion to more than $4 billion in the last 12 months.
  • The borrow product allows Coinbase’s users to borrow USDC against cbBTC using Morpho as the primary market, with Coinbase adding fixed-rate loans and other features.
  • Morpho’s lending book, being largely supported by cbBTC and USDC, has also made it more resilient to ETH’s poor price action (ETH is down 22% compared to Bitcoin's -8% this year).

Altcoin ETF Winner Is... Solana or XRP

• Spot altcoin ETFs in the US have seen heavy inflows this year, driven by a growing appetite for tokens farther down the risk curve. The race is now between Solana and XRP, which have taken in $648 million and $643 million year-to-date, respectively. These inflows far outpace Ethereum ETFs and rank second behind Bitcoin.
  • At the time of writing, Solana ETFs have seen 74% of their funds flow in since the start of the year. By contrast, BTC ETFs have seen inflows of about 1% of their $112 billion base. XRP started at $1 billion, putting its relative flow at 56%.
  • Bitcoin's flows, despite being kneecapped by poor early-year performance, have remained strong. As the category leader, Bitcoin ETFs benefit from more passive buying than altcoins.
• Solana and XRP ETFs built AUM throughout the summer, then fell this month as most ETFs saw outflows. Across the 4 largest ETF tokens (BTC, ETH, SOL, XRP), the suite shed a combined $2 billion.
  • With a couple of months to go in the year, the race is surprisingly tight between Solana and XRP. Both tokens are still down YTD but have begun to show signs of recovery along with the broader market. While Ethereum seems to have fallen out of favor for new inflows, the ecosystem is still the most impressive, boasting the largest stablecoin and DeFi TVL.

ICE ICE Baby

• Last Thursday, Intercontinental Exchange (ICE), the parent of the NYSE, signed an agreement with trade.xyz to bring Hyperliquid-based perps to the US.
  • From this agreement, ICE would be the exclusive operator of trade.xyz's regulated markets while taking a minority stake of undisclosed size.
  • Though no launch date has been given for now.
• On the day of the agreement, trade.xyz recorded $4.78 billion in volume, its highest single-day figure since August 19th.
  • This heightened volume held up for the following days as well, as trade.xyz saw three consecutive >$4 billion volume days.
  • As for the actual HYPE token, it closed Thursday near $89, up ~10% on the day after trading above $96 intraday.
  • It was just ~2% shy of its ~$98 all-time high from September 2026.
• As for the broader tokenized perps market, Binance still dominates.
  • Binance saw $27 billion of the $43.4 billion traded across tracked venues, while Hyperliquid took 11% of the market, a notable falloff from ~15% in July.
  • It is also worth noting that offshore CEXs like Binance cannot reach US retail users, whereas a regulated ICE-operated venue running on Hyperliquid rails can.

Hacktober

• This is a custom chart made by The Block Research
• Binance lost ~$6.36 billion in a hot wallet breach last Thursday in what was the largest crypto theft in history.
  • At $6.3 billion, the hack is ~4x more than the previous record of ~$1.46 billion taken from Bybit in February 2025.
  • The assets stolen from Binance were a mix, with the majority being ETH, BTC, USDT and USDC.
• Binance's initial investigation points to a compromised DevOps engineer's laptop that gave the attacker access to submit withdrawals.
  • Binance says it has found no evidence of a private key leak, and co-CEO Richard Teng has said the attack was more complex than a single employee's permissions being abused.
  • The FBI attributed the theft to the same North Korean unit behind the Bybit hack.
• Stablecoin issuers were the first line of defense as soon as the hack occurred.
  • Tether froze more than $1.57 billion in USDT and Circle more than $800 million in USDC.
  • Per latest reports, the attacker still controls more than 420K ETH and the full 18,270 BTC, worth ~$2.4 billion at the time of writing.
• Binance had frozen withdrawals after the hack and over the weekend, which might have prompted PTSD among some people that saw similar situations with FTX in 2022.
  • However, it seems the comparisons are unjustified for now, as Binance re-opened withdrawals on Sunday.
  • Net outflows from the exchange reached over $3.6 billion over the first ten hours after reopening, estimated to be ~2% of Binance’s total assets.
  • Binance has already covered ~95% of the stolen assets itself, with the rest in less liquid tokens that are taking longer to source.