Crypto prediction markets are facing a pivotal decision between regulatory compliance and decentralized operations. Kalshi, a platform regulated by the Commodity Futures Trading Commission (CFTC), is promoting event contracts as compliant financial derivatives. In contrast, Polymarket operates in a regulatory gray area, attracting significant liquidity and market interest. This situation underscores the 'impossible trinity' of achieving decentralization, result certainty, and high liquidity simultaneously. The industry is exploring three potential paths over the next 12 to 36 months, balancing these competing priorities.