Columbia Study: 25% of Polymarket Trades Inflated
- Columbia University study finds 25% inflated trades on Polymarket.
- Reported manipulation affects market confidence and valuation.
- Regulatory scrutiny likely due to transparency concerns.
Columbia University researchers report that Polymarket trades are approximately 25% inflated via wash trading between 2024 and 2025, predominantly on the Polygon blockchain.
The findings raise questions on decentralized market transparency, potentially influencing Polymarket’s valuation efforts amid scrutiny of wash trading practices.
Columbia University researchers have discovered that 25% of trades on Polymarket were inflated through wash trading between 2024 and 2025. These findings, based on on-chain data, highlight potential transparency issues in decentralized prediction markets.
Wallet clusters engaged in buy-sell loops to boost apparent volume. A Polymarket representative stated, “The company was reviewing the study amid fundraising at an up-to-$15 billion valuation”.
The report’s release coincided with Polymarket seeking substantial funding, leading to concerns over inflated trading volumes of nearly $1 million. This impact was significant on Polymarket’s own metrics rather than on large-cap assets.
Past exchange scandals indicate that such practices might attract regulatory attention, potentially affecting governance and utility tokens, as seen with previous cases such as Blur’s wash trading activities.
No prominent figures or regulatory bodies have publicly reacted to the study. However, discussions on trading volume authenticity often occur among developers and users on platforms like Twitter and Discord.
Market manipulation worries, combined with potential tokenomics effects, suggest regulatory frameworks may adapt. Historical parallels in DeFi highlight similar situations prompting changes to ensure trust and transparency.
