Research has shown that a small group of traders may be influencing prediction markets, but a new report from Solidus Labs suggests that an even smaller group is accumulating the majority of the profits. According to the report, fewer than 1% of wallets on Polymarket are capturing roughly half of all gains in key markets, with 0.55% of profitable maker wallets and 0.26% of winning taker wallets accounting for nearly the same share. This translates to approximately $8 million in profits out of a total of $16 million. The findings support previous academic research, which found that around 3% of Polymarket traders drive most price discovery.
The report highlights that this concentration of profits does not necessarily imply any wrongdoing, but rather that some traders have significant advantages, including greater capital, better infrastructure, and more effective execution strategies. Additionally, the study identified signs of wash trading, with around 15% of volume in some markets showing patterns consistent with self-trading or economically neutral positions. Solidus Labs argues that this imbalance suggests a structural divide between a small group of sophisticated traders and the broader base of participants, with the former operating in a different league entirely.