Recent findings indicate that a small cohort of traders may be dictating the direction of prediction markets, while an even smaller group is accumulating the majority of the profits. According to a report by blockchain analytics firm Solidus Labs, the concentration of profits on Polymarket is remarkably skewed, with less than 1% of wallets accounting for roughly half of all gains in key markets.
The report's analysis of Polymarket's politics markets between December 2025 and February 2026 reveals 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. In terms of actual profits, approximately $8 million out of $16 million accrued to each of these tiny groups. This data reinforces a trend observed in previous academic research: a study by the London Business School and Yale, analyzed by CoinDesk, found that around 3% of Polymarket traders drive the majority of price discovery. A small minority is influencing prices, while an even smaller minority is reaping the financial rewards.
This disparity highlights a crucial point: the concentration of wealth does not necessarily imply any wrongdoing. Some traders may simply possess greater sophistication, more substantial capital, or the ability to act swiftly on information. However, the report suggests that the scale of the imbalance indicates a structural divide between a small group operating with significant advantages and the broader base of participants.
According to the report, 'the participants capturing a disproportionate share of profits are operating in a different league entirely,' citing factors such as capital depth, infrastructure, and execution strategies that are beyond the reach of most users. The study also identifies signs of wash trading, with approximately 15% of volume in some markets exhibiting patterns consistent with self-trading or economically neutral positions.
In a binary prediction market, where outcome tokens sum to roughly $1.00, a trader could buy YES on both Trump and Harris within the same time window, register volume on each leg, and finish economically delta-neutral. Solidus notes that this type of trade has no equivalent in traditional finance. Some of this volume may be attributed to incentive farming rather than pure manipulation, as it is widely speculated that Polymarket's forthcoming POLY airdrop will factor in trading volume as a metric to allocate tokens. The report's findings should be considered in the context of Solidus' business interests, 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 alter the underlying numbers, but it does suggest that the findings should be interpreted with a critical perspective.