Quick Takeaways
- Columbia University researchers found that up to 60% of Polymarket’s trading volume may be wash trading.
- The study suggests 25% of the total volume over three years was artificial.
- Findings raise concerns about transparency in decentralized prediction markets.
Columbia Study Uncovers Artificial Trading on Polymarket
Polymarket, one of the largest blockchain-based prediction markets, is facing scrutiny after a new study from Columbia University revealed extensive artificial trading activity on the platform.
Researchers revealed in their 80-page report, “Network-Based Detection of Wash-Trading,” that wash trading accounted for nearly 60% of Polymarket’s total trading volume in July 2024, as traders bought and sold the same assets to simulate real activity.
Artificial Activity Inflated Market Volume
The report found that this artificial trading persisted through April 2025, before dropping and later resurfacing in October 2025, accounting for 20% of total volume.
Over the past three years, the researchers have judged that 25% of all Polymarket trading was driven by wash trading. This raises questions about how much of the program’s volatile increment has been organic.
Researchers Urge Transparency
Columbia University professor Yash Kanoria, a co-author of the study, told Bloomberg that he hopes Polymarket will take the findings constructively. The paper also suggests that Polymarket’s operational structure may have inadvertently encouraged such trading behavior.
Polymarket has not yet commented publicly on the findings, according to Cointelegraph.
Wash Trading Remains a Crypto Industry Problem
Wash trading is illegal in the United States because it misleads investors about a securities industry’s actual liquidity and requirements. Even so, decentralized platforms often operate in gray areas where enforcement is limited.
In 2023, Solidus Labs reported that well-nigh 70% of Ethereum-ground decentralized exchange kitties showed preindication of wash trading emphasizing a broader industry issue.
Impact on Prediction Market Growth
The number as a prediction food market like Polymarket gains traction, especially during the 2024 U. S. presidential election season. Polymarket’s accurate forecasts and substantial user base help it extend to a reported $10 billion valuation amid a rumored funding round.
Despite the tilt, Polymarket continues expanding. The program is reportedly preparing to re-record the U. S. market after receiving regulatory clearance via a no-action letter from the CFTC.
Conclusion
The Columbia study raises important worries about food and unity in a decentralized food market. As Polymarket searches for mainstream acceptance, addressing these findings may be vital to maintaining drug user confidence and regulatory credibility.