Predictions Platform Polymarket Volume Inflated by ‘Wash Trading’: Columbia Research
Polymarket, a number one crypto prediction market platform, has seen important inflation of its buying and selling quantity on account of “synthetic” wash buying and selling, a brand new Columbia University study uncovers.
The examine notes that Polymarket was not itself liable for wash buying and selling, whereas the crypto-based construction may have enabled it.
In 2024, considerations over wash buying and selling and potential market manipulation plagued the decentralized prediction platform. At the time, researchers noted {that a} “significant slice” of the digital market’s exercise would possibly stem from wash buying and selling.
Wash buying and selling is a tactic the place shares are repeatedly purchased and bought to provide the impression of upper buying and selling quantity.
Key Findings: Artificial Trading Skews Polymarket’s True Activity
The examine says that the phenomenon known as “synthetic buying and selling” has accounted for almost 25% of all purchase and promote transactions on Polymarket over the past three years.
A Polymarket consultant advised Bloomberg on Friday that the predictions market is reviewing the examine and has no speedy remark.
Per the researchers’ algorithm cut up up, the prevalence of wash commerce was discovered to be 45% of all-time quantity in sports activities markets, 17% in election markets, 12% in politics markets, and three% in crypto markets.
“I’m hopeful that Polymarket will welcome the evaluation in our paper,” Yash Kanoria, a professor at Columbia University’s enterprise college and co-author, told Bloomberg.
“Wash buying and selling doesn’t add liquidity or data to the market, so it will appear beneficial to differentiate genuine from inauthentic quantity.”
The prediction market hit document highs in October for quantity, lively merchants, and new market launches, led by the native token launch. Polymarket buying and selling quantity reached an unprecedented $2.59 billion high in October.
The platform not too long ago introduced securing $205 million throughout two beforehand undisclosed funding rounds, between 2024 and 2025, valuing the agency at $1.2 billion.
Polymarket Accuracy and Indicators of Credibility
According to unbiased monitoring, Polymarket is greater than 95% correct within the closing hours of a market.
In a detailed analysis, Cryptonews creator Eric Huffman notes that Polymarket is legit and authorized in lots of main markets worldwide.
The platform’s prime rival Kalshi, achieved a month-to-month buying and selling quantity document, breaking above $4.39B in October. According to data collected by Dune Analytics, Kalshi and Polymarket noticed notional buying and selling quantity rise above $2 billion for the primary time in the course of the week ending Oct. 19.
In the U.S., the Commodities and Futures Trading Commission (CFTC) labeled Polymarket’s prediction markets as “binary choices,” which may solely be supplied by a registered alternate. This resulted in a $1.4 million civil penalty for Polymarket and compelled the platform to limit entry to U.S. customers.
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