Research suggests that a small number of traders are manipulating prediction markets, but an even smaller group is accumulating the majority of the profits. According to a report by blockchain analytics firm Solidus Labs, fewer than 1% of wallets on Polymarket are capturing roughly half of all gains in key markets. Between December 2025 and February 2026, a mere 0.55% of profitable maker wallets and 0.26% of winning taker wallets accounted for nearly half of the profits, totaling around $8 million out of $16 million. This data supports previous findings that a small minority of traders drives price discovery, with around 3% of Polymarket traders responsible for most price movements.
The report highlights that this concentration of wealth does not necessarily imply wrongdoing, but rather that some traders have a significant advantage due to their sophistication, capital, and speed of action. However, 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.
The report also notes signs of wash trading, with around 15% of volume in some markets showing patterns consistent with self-trading or economically neutral positions. This phenomenon is unique to binary prediction markets and has no equivalent in traditional finance. While some of this volume may be attributed to incentive farming, it is essential to approach the data with a critical eye, considering the firm's vested interest in promoting its surveillance platform.