A Quarter of Polymarket Volume May Be Wash Trading, Columbia Study Finds

A recent study from Columbia University suggests that approximately 25% of the trading volume on Polymarket, a prediction market platform, may be attributed to wash trading. This finding is based on an analysis of 1.26 million active wallets, revealing suspicious trading patterns in about 14% of them. These patterns indicate users might be exchanging assets among themselves to inflate activity, driven by potential rewards tied to cryptocurrency token launches. Factors contributing to this behavior include the absence of KYC verification, lack of transaction fees, and incentives for airdrop farming. Suspicious trades reportedly peaked at nearly 60% of weekly volume in December 2024 but later declined to under 5% by May 2025. By October, however, it surged again to around 20%. Wash trading is seen as detrimental to market integrity, making it important for platforms to address these patterns proactively to ensure trust in prediction markets.

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