25% of all @Polymarket volume might be FAKE
I read the 80-page paper (so you don’t have to)
Here's the SHOCKING TRUTH 🧵👇
1/ The Study
“Network-Based Detection of Wash Trading” came out on Nov 7
They looked at 67M+ trades from 1.2M wallets on @Polygon & found out:
> around 25% of all volume might be fake
> that’s roughly $5B of wash trading.
Columbia University published an article on @Polymarket a few days ago.
This paper presents the most comprehensive empirical study to date on wash trading in a prediction market.
Using 67M+ trades (2022–2025), the authors find that about 25% of all volume shows wash-trade patterns, peaking near 60% in Dec 2024 before falling to <5% by mid-2025 and rising again to ~20% by Oct 2025.
Wash trading is concentrated in Sports (45%) and Election (17%) markets and driven by zero fees, no KYC, and airdrop farming incentives.
The algorithm iteratively scores wallets based on how often they close positions and trade with similar wallets, revealing large, self-contained clusters of colluding accounts.
Bottom line: Wash trading was rampant on Polymarket in 2024–25. The new method provides a scalable, interpretable tool for detecting such manipulation in crypto and other markets.
2/ Wash what?
Wash trading means trading with yourself.
→ You make two wallets
→ One buys “Yes”
→ The other buys “No”
No risk & no gain
Just fake activity that makes the chart look busy
Happens more than you think lol
3/ Numbers
About 14% of wallets likely doing it, mostly in small groups trading with each other.
It was worst in late 2024 when elections and token hype were everywhere.
Some weeks were 60% fake.
By mid 2025 it cooled off, then picked up again in October with the relaunch buzz.
4/ Why it happened?
Everyone was waiting for the $POLY airdrop.
More activity felt like better odds.
Others were chasing leaderboard points.
And surely, some were just messing around.
Zero fees and no KYC made it very easy.
5/ Who's to Blame?
The study didn't say Polymarket caused it, just that the structure allows it.
Some people think that damages trust.
Some say it is nothing new.
Both sides make sense but 1/4 of volume being fake is still a lot to process.
7/ The Consequences
Regulators noticed all of this too.
Wash trading is illegal in traditional markets.
Polymarket had a CFTC fine back in 2022.
Nothing new yet but this report definitely puts them back on the radar.
Whether they like it or not.
8/ My thoughts
From what I saw, the protocol itself does what it is supposed to.
The strange part starts with how people use it, not how it works.
UMA handles the actual outcomes cleanly.
The fake volume comes from people trying to be clever.
Feels less like a system flaw & more like a reminder of how people behave when the door is open.
1,4 тыс.
22
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