Research has long suggested that a small minority of traders drives price movements in prediction markets, but new findings indicate that an even smaller subset is accumulating the majority of the profits. According to a report by blockchain analytics firm Solidus Labs, less than 1% of wallets on Polymarket are capturing roughly half of all gains in key markets. This phenomenon is evident in Polymarket's politics markets, where 0.55% of profitable maker wallets and 0.26% of winning taker wallets accounted for nearly 50% of gains between December 2025 and February 2026, translating to approximately $8 million in profits. These findings build upon existing academic research, which has shown that a small fraction of traders, approximately 3%, is responsible for most price discovery on Polymarket.
The significant disparity in profit distribution underscores the presence of a structural divide between a small, sophisticated group of traders and the broader base of participants. While this concentration of wealth does not necessarily imply wrongdoing, it does suggest that certain traders possess significant advantages, including greater capital, superior infrastructure, and more effective execution strategies.
The report also highlights signs of wash trading, with around 15% of volume in some markets exhibiting patterns consistent with self-trading or economically neutral positions. This phenomenon is particularly notable in binary prediction markets, where traders can engage in economically delta-neutral trading strategies that have no equivalent in traditional finance.
Some of this activity may be driven by incentive farming, as traders seek to maximize their potential allocation of tokens in Polymarket's forthcoming POLY airdrop. The findings of this report are based on verifiable, on-chain data, but it is essential to consider the context in which they are presented, as the firm behind the report, Solidus, sells surveillance infrastructure and has a vested interest in promoting the need for such solutions.