US EditionStudy Finds 25% of Polymarket Trades May Be Artificial
Researchers found wash trading peaked at nearly 60% of weekly volume in December 2024 and involved complex wallet clusters inflating Polymarket’s activity metrics.
- On Thursday, Columbia University researchers posted a paper on SSRN estimating nearly 25% of Polymarket's historical volume involved rapid buy-and-sell trades to inflate activity.
- Speculation over a possible token motivated volume manipulation, and Polymarket's design features—no identity verification, no trading fees, and use of USDC—enabled large-scale wash trading, the researchers say.
- Using onchain data from the Polygon blockchain, the researchers' algorithm flagged 14% of 1.26 million wallets as wash trading, with a cluster of over 43,000 wallets generating nearly $1 million in volume.
- Researchers warn that inflated volume can mislead users and market participants, while a Polymarket representative said the company was reviewing the study amid fundraising at an up-to-$15 billion valuation.
- The paper shows trading trends across 2024–2025, noting fake trading peaked at nearly 60% weekly in December 2024, fell to about 5% in May and rose to 20% by early October, with 45% in sports markets and 17% in election markets.
33 Articles
33 Articles
Polymarket Volume Inflated by ‘Artificial’ Activity, Study Finds
The volume of activity on Polymarket, one of the most popular prediction markets, has been significantly inflated by so-called wash trading in which users rapidly buy and sell the same contracts, according to a new study by Columbia University researchers.
Wash trading accounts for a quarter of Polymarket’s activity, Columbia study reveals – #CryptoUpdatesGNIT
About 14% of wallets showed behaviour consistent with coordinated wash trading. Artificial trading peaked at 60% in December 2023 and dropped to 5% by May. ICE plans to invest up to $2 billion as Polymarket prepares for a regulated US return. A new study by Columbia University researchers has found that nearly a quarter of all trading on Polymarket, one of the world’s leading decentralised prediction platforms, has been artificially inflated by …
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