Research has shown that a small group of traders is exerting significant influence over prediction markets, but a even smaller group is reaping most of the financial rewards. A recent study by blockchain analytics firm Solidus Labs found that profit distribution on Polymarket is highly skewed, with less than 1% of wallets accounting for roughly half of all profits in key markets.

The study analyzed Polymarket's politics markets between December 2025 and February 2026 and discovered 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 in gains went to each of these tiny groups. This data reinforces a trend observed in previous academic research, which found that a small minority of traders drives most price movements.

A study by the London Business School and Yale, analyzed by CoinDesk, revealed that about 3% of Polymarket traders are responsible for most price discovery. The findings highlight a striking contrast: while a small minority influences prices, an even smaller minority reaps the financial benefits. This disparity does not necessarily imply any wrongdoing, as some traders may simply be more sophisticated, better capitalized, or quicker to act on information.

However, the report argues that the scale of the imbalance suggests a fundamental divide between a small group of traders with significant advantages and the broader base of participants. According to the report, the traders who capture a disproportionate share of profits are operating in a completely different league, with access to greater capital, infrastructure, and execution strategies that are beyond the reach of most users. Solidus' 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 trade 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 the result of incentive farming rather than pure manipulation, as it is widely speculated that Polymarket's upcoming POLY airdrop will use 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 a surveillance platform and has recently signed a deal to deploy it across over 4,000 markets on Kalshi, Polymarket's largest U.S.-regulated competitor. While the data is verifiable and based on on-chain information, the framing of the report - that prediction markets require surveillance infrastructure, preferably Solidus' - is part of the company's sales pitch.

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