Kalshi Ends Volume Rewards Program After $5 Billion in Ethereum (ETH) Perpetual Trades Draw CFTC Review

Kalshi Files to End Trader Rewards

Kalshi, the New York-based prediction market operator and the largest venue of its kind in the United States, has told the US Commodity Futures Trading Commission (CFTC) that it will terminate its Volume Incentive Program, effective as early as Tuesday, Oct. 13. The move is set out in a filing lodged with the regulator on Monday, Sept. 28. Under the program, Kalshi split a fixed reward pool among participants according to their share of trading volume in eligible markets, a structure whose stated purpose was to lift activity and liquidity. The heaviest traders captured the largest share of payouts, which made the scheme a direct subsidy for order flow at scale. The filing gives no reason for the termination and does not tie the decision to any other matter. The timing is nonetheless pointed. Kalshi's perpetual contracts on Ethereum (ETH), synthetic positions that track the Ethereum (ETH) price with no expiry date, have spent the past week under outside scrutiny after public execution records showed enormous numbers of nearly identical trades at a fixed size of about $5,500. Compiled data covering the market since August points to close to 1 million such transactions with a combined value above $5 billion, and the CFTC is reviewing that activity. Kalshi rejects any suggestion of improper volume. The company says one market maker quoted constant order sizes that speed-advantaged participants absorbed again and again, that hundreds of distinct traders stood on the other side of those fills, and that its matching engine mechanically blocks an account from filling its own orders. Kalshi has also said that, as of its public response, the CFTC had not contacted it over the ETH perpetual trading and that it does not regard itself as under formal investigation. For traders, the practical effect is simple: from Oct. 13, churn in eligible markets no longer earns payouts.

Inside the $5,500 Trade Pattern

The pattern first surfaced in public fill data on Kalshi's Ethereum market. An analysis of 3,450 Ethereum (ETH) perpetual trades executed between Sept. 17 and Sept. 20 found 1,406 with notional values within $2 of $5,499, worth about $7.7 million combined, or 57% of the sample's $13.5 million in volume. The fingerprint runs deeper than those four days. Across 46 one-hour samples taken between June 19 and Sept. 20, 43 showed repeated trades at a fixed notional amount, and in some hours a single fixed size accounted for more than half of the traded value. The dominant size also moved over time, from $9,999 to $4,999, $3,999, $4,499 and then $5,499, a sequence consistent with automated programs that place orders in fixed dollar clips. Position data sharpened the concern. One snapshot of the ETH perpetual market showed 24-hour volume of about $539 million against open interest of roughly $3.1 million, a turnover ratio near 174 times. A second snapshot put 24-hour volume at about 93 million contracts against 1.5 million open contracts, roughly 61 times, while the median across the 20 Kalshi perpetual markets with open positions stood near 8 times. High-frequency market making and intraday round trips can produce elevated turnover on their own; the dispute is that the churn coincided with precise, repeated fixed-size fills. Kalshi's public API does not disclose trader identities, so the company's account of hundreds of independent counterparties cannot be fully verified from outside. Against that backdrop, the business kept expanding: September volume had reached $52.98 billion as of Sept. 29, above August's roughly $38.67 billion and a monthly platform record, while data compiled by Pew Research showed combined monthly volume on Kalshi and Polymarket doubling from about $26 billion in May to about $53 billion by July.

Volume Is Not Capital

In our reading, the load-bearing document is the filing itself, which states only that the program will terminate and attaches no reason. The analytical point is plain: volume is not capital at rest. The same $5,500 position turned over a hundred times in a day produces $550,000 of reported trading volume while the net exposure stays a few thousand dollars, which is why turnover ratios, open interest and independent counterparty counts say more about real liquidity than raw volume ever does. Unlike spot Ethereum (ETH) held in an Ethereum treasury structure or a staking position, a perp build-up leaves no standing asset on the platform. From Oct. 13, Kalshi operates its markets without the volume reward, while the CFTC's examination of its ETH trading remains open with no finding in the public record.