It appears that a minuscule group of traders is dominating the profits in prediction markets, with an even smaller subset accumulating the majority of the gains. According to a recent report by blockchain analytics firm Solidus Labs, the concentration of profits on Polymarket is staggering, with less than 1% of wallets capturing approximately 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 and 0.26% of winning taker wallets accounted for roughly 50% of gains, translating to around $8 million out of $16 million in profits.

This discovery reinforces existing academic research, which suggests that a small minority of traders drives most price movements. A previous study by the London Business School and Yale, analyzed by CoinDesk, revealed that approximately 3% of Polymarket traders are responsible for the majority of price discovery. The significant disparity between the minority of traders driving prices and the even smaller minority reaping the benefits highlights a crucial point: concentration does not necessarily imply malpractice.

Some traders may simply possess greater sophistication, better capitalization, or faster access to information, giving them a competitive edge. However, the report argues that the scale of the imbalance suggests a structural divide between a small group of traders operating with significant advantages and the broader base of participants. Traders who capture a disproportionate share of profits are 'operating in a different league entirely,' according to the report, citing factors such as capital depth, infrastructure, and execution strategies that are beyond the reach of most users.

The study also identified signs of wash trading, with around 15% of volume in some markets exhibiting patterns consistent with self-trading or economically neutral positions. In a binary prediction market, outcome tokens are designed to sum to approximately $1.00, allowing a trader to buy YES on both sides of a market within the same time window, register volume on each leg, and remain 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 upcoming 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, which is used to generate the report's data, and has recently signed a deal to deploy the 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 – emphasizing the need for surveillance infrastructure, preferably Solidus' – is part of the firm's sales pitch.

This does not change the underlying numbers, but it does suggest that the findings should be interpreted with a critical perspective.