Recent findings suggest that a small clique of traders is dominating the prediction markets, with an even smaller subset accumulating the majority of the profits. According to a report by blockchain analytics firm Solidus Labs, the distribution of profits on Polymarket is starkly uneven, with less than 1% of wallets accounting for roughly half of all gains in key markets. The report analyzed Polymarket's politics markets between December 2025 and February 2026 and found that a mere 0.55% of profitable maker wallets captured 50% of gains, while 0.26% of winning taker wallets accounted for nearly the same share. This translates to approximately $8 million out of $16 million in profits going to each of these tiny groups.
This discovery builds upon existing research, which indicates that a small minority of traders drives most price movements. A prior study by the London Business School and Yale, analyzed by CoinDesk, found that about 3% of Polymarket traders are responsible for the majority of price discovery. The disparity highlights that a small minority not only influences prices but also retains the majority of the profits. However, this concentration does not necessarily imply wrongdoing, as some traders may possess superior skills, more capital, or faster access to information.
The report suggests that the scale of this imbalance indicates a structural divide between a small group of elite traders and the broader user base. It notes that the participants capturing a disproportionate share of profits operate with significant advantages, including greater capital depth, infrastructure, and execution strategies that are inaccessible to most users. The study also identified signs of wash trading, with roughly 15% of volume in some markets exhibiting patterns consistent with self-trading or economically neutral positions. This phenomenon is unique to binary prediction markets, where outcome tokens sum to approximately $1.00, allowing traders to engage in economically delta-neutral trades.
Some of this volume may be attributed to incentive farming rather than pure manipulation, as it is speculated that Polymarket's upcoming POLY airdrop will consider trading volume as a metric for token allocation. Solidus Labs, the firm behind the report, sells a surveillance platform and has recently partnered with Kalshi, Polymarket's largest U.S.-regulated competitor, to deploy its platform across over 4,000 markets. While the data is verifiable, the framing of the report serves as a sales pitch for the firm's surveillance infrastructure.