Polymarket, the largest prediction market platform, may have seen a significant portion of its trading activity inflated by wash trading, according to a new study by Columbia University researchers.
Built on the Polygon network, a layer-2 scaling solution built on Ethereum, Polymarket allows users to bet on real-world events using the USDC stablecoin. Instead of relying on bookmakers, the blockchain-based platform operates through smart contracts where users buy and sell shares representing possible outcomes — such as election results, sports games, or economic indicators.
The price of each share reflects the market’s collective probability of an event occurring.
Polymarket gained popularity for its accurate, crowd-driven forecasts but has also drawn regulatory scrutiny.
Research reveals wash trading
A paper, named “Network-Based Detection of Wash Trading,” was published on Nov. 6. It analyzed over two years of on-chain data and estimated that roughly 25% of Polymarket’s historical volume came from users buying and selling contracts back and forth, often to themselves or coordinated accounts, without changing their overall market exposure.
The practice, known as wash trading, is illegal in traditional markets, but remains a recurring problem in crypto, where anonymity is common.
Researchers found that the share of suspected fake trades peaked at nearly 60% of total weekly volume in December 2024 and has continued through October 2025. Sports and election markets were hit hardest, with some weeks showing over 90% of trades as inauthentic.
One cluster of over 43,000 wallets reportedly generated nearly $1 million in volume, most at prices under a cent, with almost all activity flagged as likely wash trades.
Some traders reportedly moved USDC through multiple wallets to reuse capital, suggesting coordinated efforts to inflate metrics. Despite the scale of the manipulation, the study noted that most suspected wallets showed no real profits, implying the motive was to boost visibility ahead of possible token airdrops or platform rewards.
Polymarket, which allows users to bet on binary outcomes using the USDC stablecoin, does not currently require identity verification or charge trading fees — features researchers argue may make it particularly vulnerable to such manipulation.
Polymarket has yet to respond to queries sent by The Street Roundtable.
