Research has shown that a small group of traders may be influencing prediction markets, but a even smaller group is reaping most of the financial rewards. According to a recent report by blockchain analytics firm Solidus Labs, profit concentration on Polymarket is extremely high, with less than 1% of wallets accounting for roughly half of all gains in key markets.
The report found that between December 2025 and February 2026, 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, with approximately $8 million of the $16 million in profits going to each of these tiny groups. This data reinforces previous academic findings, including a paper by the London Business School and Yale, which discovered that around 3% of Polymarket traders drive most price discovery.
The significant disparity highlights that a small minority not only moves prices but also retains the majority of the profits. While this concentration does not necessarily imply any wrongdoing, it suggests that some traders have significant advantages, including greater sophistication, better capitalization, or faster access to information, creating a structural divide between a small group of participants and the broader user base. The report notes that the traders capturing a disproportionate share of profits are operating at a completely different level, with access to greater capital depth, infrastructure, and execution strategies that are beyond the reach of most users. Furthermore, Solidus' study identified signs of wash trading, with around 15% of volume in some markets exhibiting patterns consistent with self-trading or economically neutral positions.
This type of trading, which involves buying YES on both sides of a binary prediction market, has no equivalent in traditional finance, according to Solidus. Some of this volume may be the result of incentive farming rather than pure manipulation, as it is widely speculated that Polymarket's upcoming POLY airdrop will factor in trading volume as a metric to allocate tokens.
It is essential to note that Solidus is not an impartial observer, as the firm sells the HALO surveillance platform, whose output the report relies on, and has recently signed a deal to deploy that platform across over 4,000 markets on Kalshi, Polymarket's largest U.S.-regulated competitor. While the data is verifiable and on-chain, the framing of the report - that prediction markets require surveillance infrastructure, preferably Solidus' - is part of the sales pitch. This does not change the underlying numbers but suggests that they should be interpreted with caution.