Columbia study finds $4.5B in wash trading on Polymarket
A Columbia University study has found that roughly one-quarter of trading volume on Polymarket—amounting to about $4.5 billion—may consist of wash trading.
According to research published Thursday by Columbia University (U.S.) scholars, approximately 25% of all trading volume on Polymarket, one of the world’s largest prediction markets, could be wash trading.
The study, reported by Decrypt, analyzed Polymarket’s trading history and identified suspicious patterns in 14% of 1.26 million active wallets. Researchers said these patterns indicate that the same users may be buying and selling to themselves to inflate trading activity and qualify for potential crypto token rewards.
“There are several institutional features that collectively enable and potentially incentivize large-scale wash trading. First, Polymarket does not use Know Your Customer (KYC) verification, which allows users to anonymously create and trade across multiple wallet addresses,” the authors wrote.
Polymarket also charges no transaction fees, making wash trading cheaper than on exchanges where fees are applied.
Why manipulate markets?
Allen Siroli, one of the report’s authors, told Decrypt that the team “does not know the specific motives behind wash trading on Polymarket, but it might be linked to airdrop farming.”
“Wash trading doesn’t require much capital since funds circulate between multiple trades. We have no evidence that the exchange itself is involved,” Siroli said.
Suspicious trades peaked at nearly 60% of weekly volume in December 2024, dropped below 5% by May 2025, and rebounded to around 20% by October. According to the study, a total of roughly $4.5 billion in transactions can be classified as likely wash trades.
Wash trading on Polymarket varied widely across categories: the algorithm classified 45% of sports market volume as probable wash trading, compared with 17% in election markets, 12% in politics, and 3% in crypto markets. At peak periods, estimates rose as high as 95% on election markets and 90% on sports markets.
Wash trading—when traders buy and sell the same asset to create fake activity—is illegal on regulated markets because it distorts prices and volume metrics.
Previous research has shown that “more than 70% of total volume” on unregulated exchanges may be wash trades, which authors say may stem from attempts to manipulate rankings and reputation metrics.
As we wrote, Polymarket in clear: What DOJ case closure means for prediction markets
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