If you had the “over” on the bet that over 10% of trades on the predictions market Polymarket are inauthentic, go ahead and cash in that ticket. According to a recent study from researchers at Columbia University, as much as one quarter of all trading volume happening on the platform is “artificial trading.”
The researchers looked at three years’ worth of buying and selling activity on Polymarket, which allows people to trade “contracts” related to real-world events based on the probability of a given outcome. What they found was that 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.
It’s important to note that the researchers don’t accuse Polymarket of participating in these transactions to artificially create apparent interest in an event, but they do suggest that the fact that the platform is using a cryptocurrency stablecoin as its medium of exchange may make these types of transactions easier for traders to execute.
The researchers developed an algorithm that helped to identify accounts that were only engaging with a small subset of other accounts, regularly buying a contract one of those other accounts was selling or vice versa. That revealed networks of traders who appeared to be performing wash trades that artificially created additional volume and interest where there otherwise was none.
There was no shortage of those types of transactions happening. In fact, the researchers flagged nearly 15% of wallets on the platform—a total of 1.26 million of them—that they believe are participating in these artificial transactions. While 25% of all Polymarket volume can be attributed to these fake trades, per the researchers, levels spiked much higher than that at times. At its peak in December 2024, they estimate that as much as 60% of trading volume was likely attributable to phony orders.
Polymarket did not respond to a request for comment regarding the study’s findings.
While Polymarket may not be actively involved in manipulating trading volume on its platform, it sure does do a lot of work to generate volume via posting bait on social media. On November 4, the day of the New York mayoral election, the company went all in on trying to gin up buyers and sellers willing to bet on the outcome of the race, posting about how Mamdani was listed twice on the ballot (a thing that is true but not malicious, as right wing accounts across social media tried to to suggest) and saying there was a “surge of whales” betting on Andrew Cuomo to win while asking, “Do they know something we don’t?” That’s probably not technically market manipulation, but it is pretty shameless.
