Study finds 25% of Polymarket’s trading volume may be fake
A Columbia University study revealed that trading volumes on the prediction market platform Polymarket have been significantly inflated by wash trading – transactions in which users repeatedly buy and sell the same contracts to create the illusion of activity.
According to the study, published on SSRN, an average of 25% of all trades on Polymarket over the past three years were artificial. The share of such activity varied over time – from 60% in December 2024 to 5% in May 2025, before rising again to around 20% by October.
The researchers noted they are not accusing Polymarket of deliberately facilitating manipulation but pointed out that the platform’s design makes it possible. With no transaction fees, the ability to create multiple wallets, and the use of anonymous Polygon addresses, traders can simulate trading without real risk.
The study found that 14% of Polymarket’s 1.26 million wallets showed signs of wash trading, frequently interacting with each other while rarely engaging with the rest of the market.
As Polymarket’s popularity has surged in 2025 – following a $2 billion investment from Intercontinental Exchange (ICE) – the findings could reshape its reputation as the market leader in prediction trading. Polymarket still ranks first by trading volume, but its main rival, Kalshi, which operates off-chain, reports more transparent figures.
Artificial volume can distort market signals, especially when prediction markets are used to gauge public sentiment. If a large portion of trades doesn’t reflect real demand, the “wisdom of the crowd” turns into a statistical illusion.
The researchers also suggested that some suspicious activity may be tied to expectations of a token launch. Users often increase trading volume in hopes of qualifying for a future airdrop. Polymarket founder Shayne Coplan has previously hinted at releasing a native token – a possibility that may have fueled short-term bursts of artificial activity.
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