Study Finds Around a Quarter of Polymarket Trades Are Fake

A recent study by Columbia University researchers reveals that approximately 25% of trades on the predictions market Polymarket are not genuine.

Polymarket allows users to trade contracts based on the likelihood of real-world events occurring. The study analyzed three years of trading data on the platform and identified a significant number of “wash trades,” where the same contract is bought and sold between accounts to inflate trading volume artificially.

“About 25% of those contracts were ‘wash trades,’ which happens when a person or entity buys and sells the same contract to create fake levels of trading volume that can manipulate the market.”

The researchers clarify they do not accuse Polymarket of deliberately creating fake interest. However, using a cryptocurrency stablecoin as the trading medium might simplify executing such trades.

An algorithm developed by the researchers detected accounts predominantly trading with a limited set of other accounts, frequently buying contracts from or selling to those same accounts.

Implications for Market Integrity

Artificial trading activity undermines genuine market signals.
Cryptocurrency-based trading platforms may face unique challenges in preventing wash trades.
Regulatory and platform-level solutions may be needed to ensure fair trading practices.

Overall, the study highlights potential risks of market manipulation on crypto-based prediction platforms.

Author's summary: A Columbia University study reveals that a quarter of trades on Polymarket are fake wash trades, exploiting crypto stablecoins to manipulate market activity.

Gizmodo — 2025-11-07

Study Finds Around a Quarter of Polymarket Trades Are Fake

Implications for Market Integrity

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