Polymarket, one of many largest blockchain-based prediction markets, might have had its buying and selling exercise considerably inflated by a apply referred to as wash buying and selling, in keeping with new analysis from Columbia College.
In a paper revealed Thursday analyzing greater than two years of onchain knowledge, the researchers estimate that almost 25% of the platform’s historic quantity concerned customers quickly shopping for and promoting contracts — usually to themselves or with colluding accounts — to inflate exercise metrics with out altering their web market place.
Wash buying and selling is illegitimate in conventional monetary markets and usually frowned upon in crypto, although it stays frequent, particularly the place identities could be hidden.
The examine’s findings counsel the quantity of faux trades peaked at almost 60% of weekly quantity in December 2024 and has remained an ongoing subject by means of October 2025. Sports activities and election markets have been probably the most affected. In some weeks, over 90% of trades in these classes appeared inauthentic.
The researchers stated they developed a novel algorithm to detect wash buying and selling based mostly on pockets habits, specializing in how usually customers open after which rapidly shut positions, particularly when buying and selling primarily with different wallets that exhibit the identical patterns.
The researchers stated this methodology allowed them to determine not simply easy back-and-forth trades, but in addition complicated networks of wallets forming buying and selling loops or clusters, some involving tens of hundreds of accounts. One recognized cluster of over 43,000 wallets was accountable for almost $1 million in buying and selling quantity, largely at costs beneath a penny, with almost all of it flagged as doubtless wash buying and selling.
In some instances, merchants appeared to move contracts by means of dozens of wallets in fast succession, typically even holding dropping positions to provide the looks of official trades. The examine additionally discovered proof of customers reusing capital by transferring USDC throughout a number of wallets, additional suggesting coordinated efforts. Regardless of these actions, the paper notes that lots of the suspected wash buying and selling wallets made no actual income, highlighting that the purpose might have been to recreation future incentives like token airdrops or platform rankings, slightly than monetary return.
Polymarket, which permits customers to wager on binary outcomes utilizing the USDC stablecoin, doesn’t require id verification and prices no buying and selling charges, options the researchers argue might make it particularly weak to clean buying and selling. The examine additionally factors to hypothesis over a possible future token as a doable incentive for quantity manipulation.
Polymarket has beforehand been accused of manipulation, notably round politically delicate markets just like the U.S. presidential election. However not everybody buys the narrative. Harry Crane, a statistics professor at Rutgers, has argued that considerations about manipulation could also be overblown, and even politically motivated.
“I consider the narrative about manipulation is an try by legacy media to discredit these markets, which threatens their capability to manage the narrative,” he instructed CoinDesk final 12 months.
Nonetheless, the Columbia workforce argues that inflated quantity can distort customers’ perceptions of market sentiment. They suggest utilizing network-based algorithms to flag suspicious buying and selling patterns and restore belief in these rising monetary instruments.
Polymarket didn’t return a request for remark by press time. The corporate is in the course of a proper return to the U.S., after beforehand settling prices with U.S. regulators. As a part of this course of, the corporate will subject a token, its chief advertising officer stated final month. On the similar time, Polymarket is reportedly wanting to boost funds at an up-to-$15 billion valuation.
