Columbia University’s study finds up to 25% of Polymarket’s volume may involve wash trading, potentially distorting sentiment in sports and election markets and incentivized by future token or ranking benefits.
Columbia University researchers estimate that nearly 25% of Polymarket’s trading volume may be fake, driven by wash trading. Analysis of over two years of onchain data revealed instances where weekly suspicious volume exceeded 90% in sports and election markets, peaking at 60% overall in December 2024. The research identified coordinated trading loops involving tens of thousands of wallets, with one cluster of 43,000 wallets generating nearly $1 million in likely inauthentic volume. Evidence suggests traders reused capital and made no significant profits, indicating the aim was to game incentives such as potential token airdrops or platform rankings. Researchers warn this inflates market sentiment perceptions and recommend network-based algorithms to detect suspicious trading patterns.