"Study Reveals 25% of Polymarket's Trading Volume is Artificial Due to Ghost Trades"

Researchers from Columbia University have discovered that as much as a quarter of the trading activity on Polymarket—a leading prediction market platform—could be the result of wash trading, where users trade contracts among themselves to falsely boost trading volume, according to

. Their research, titled "Network-Based Detection of Wash Trading," examined more than two years of blockchain data and uncovered recurring transaction patterns between linked wallets, typically involving negligible gains or losses. The team identified 14% of Polymarket’s 1.26 million wallets as showing signs of wash trading, with certain wallet groups generating over $1 million in volume, as highlighted by .

The extent of this activity varied widely by market type, with sports and election markets experiencing the most suspected manipulation. For example, the study found that 45% of all-time sports market volume was likely due to wash trading, compared to 17% for election markets and just 3% for crypto markets.

Instances of suspicious trading peaked at 95% in election markets during March 2025 and 90% in sports markets in October 2024. The authors pointed out that such manipulation damages the integrity of prediction markets, which depend on genuine trading volume to represent collective insight, according to .

Polymarket, which operates on the Polygon blockchain and uses the

stablecoin, has been under regulatory examination for several years. The platform was penalized by the U.S. Commodity Futures Trading Commission (CFTC) in 2022 and subsequently acquired a CFTC-approved exchange to resume operations in the U.S. The study pointed to systemic weaknesses that allow such manipulation, such as the absence of transaction fees and the ease of creating anonymous wallets. While the researchers did not claim Polymarket was directly responsible, they suggested that user incentives—like speculation about token airdrops—may have encouraged this behavior, as reported by .

These results emerge as Polymarket faces competition from platforms like Kalshi Inc., which has recently seen a surge in trading thanks to the rise of sports betting. The researchers recommended that Polymarket implement their detection approach to identify and remove suspicious wallets, stressing that wash trading skews market data and undermines confidence. Polymarket has not yet issued a response to these findings.