Polymarket’s Trading Volume May Be 25% Fake, Columbia Study Finds

Research from Columbia University indicates that nearly 25% of the trading volume on the prediction market platform Polymarket may be fake due to wash trading, where users trade with themselves or colluding accounts to inflate activity metrics without changing net positions. The study analyzed over two years of on-chain data, finding that fake trades peaked at nearly 60% of weekly volume in December 2024, particularly affecting sports and election markets. Researchers used a novel algorithm to detect complex trading loops involving large networks of wallets, identifying one cluster of over 43,000 wallets. The goal of this manipulation appears to be gaming future incentives like token airdrops rather than immediate financial profit. The paper suggests Polymarket's lack of identity verification and zero trading fees make it vulnerable, and the authors propose using network-based algorithms to restore trust.

(Source：CoinDesk)