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

A recent study from Columbia University reveals that approximately 25% of all trading volume on Polymarket, a major prediction platform, may be attributed to wash trading. The analysis examined 1.26 million active wallets on the platform and found suspicious trading patterns in 14% of them. Researchers noted that the incidence of these trades escalated to nearly 60% of weekly volume in December 2024, showcasing a pattern of users buying and selling among themselves to manipulate activity levels for potential token rewards. The absence of Know-Your-Customer (KYC) verification on Polymarket facilitates the creation of multiple anonymous wallet addresses, thus incentivizing wash trading and airdrop farming. The study highlighted that wash trading varies significantly across markets, with some markets seeing as much as 95% classified as likely wash trades during peak periods. This trading practice undermines the credibility of prediction markets by distorting price and volume metrics, potentially leading to a misrepresentation of genuine user interest and market health.

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