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

A study by Columbia University reveals that approximately 25% of trading volume on Polymarket, a major prediction platform, may be attributed to wash trading. This analysis examined the trading history of 1.26 million active wallets on Polymarket and discovered suspicious patterns in 14% of transactions. The research indicates that these patterns suggest users are trading among themselves to inflate trading activity for potential crypto rewards. Key factors facilitating this wash trading include the absence of KYC verification and the lack of transaction fees on Polymarket. While wash trading peaked at nearly 60% of weekly volumes in December 2024, it has fluctuated significantly over time. Notably, 45% of all-time volume in Sports markets was identified as potentially wash trading, compared to 12% in politics markets. The researchers emphasize that wash trading undermines the integrity of prediction markets, impacting user confidence in the platform.

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