Polymarket’s odds as an election indicator have been questioned in a new report despite its widespread mention in the media.
On October 30, Fortune reported that analysts at two crypto research firms had found evidence of “rampant wash trading” on the blockchain betting platform.
The findings come from separate research conducted by Chaos Labs and Inca Digital.
Spurious betting activity?
Wash trading is a form of market manipulation where assets are bought and sold repeatedly in a short period to create a false impression of volume and activity. Chaos Labs researchers claimed that wash trading made up around a third of Polymarket’s election trading volume, while Inca Digital said it was a “significant part of the volume”.
According to research, the actual transaction volume of $1.75 billion does not match the reported volume of $2.7 billion. In addition, the platform appears to be counting share prices as full dollars, regardless of the actual cost, he added.
Chaos Labs analyzed chain data to isolate high-volume traders. It filtered out users who were “likely engaging” in normal activities such as market making, the report said. The firm then separated out those showing signs of wash trading “by examining their ratio of buy and sell orders and considering their holdings compared to their trading volume.”
A Polymarket spokesperson told Fortune: “We strive to provide users with the fairest analysis possible, and our transparency allows the marketplace to decide.”
Polymarket is the largest blockchain betting platform, founded in 2020 and backed by Peter Thiel’s Founders Fund. It was forced to move offshore after US regulatory action in 2022 and is not accessible to Americans.
In September, it was reported that Polymarket was seeking $50 million in new funding and planned to launch its own token. It was also reported that US election hype drove the platform’s trading volume to $533 million in September.
Trump has a big lead in Polymarket
The latest election betting results on the platform show that Donald Trump has a 66% lead over Kamala Harris at 34%.
Last electoral possibilities
Trump • 66.1% chance
Harris • 33.9% chance
5 days left. pic.twitter.com/aybIfAMqT7
— Polymarket (@Polymarket) October 30, 2024
Polling by AtlasIntel, the most accurate poll of the 2020 election, according to Florida Voice deputy news director Eric Daugherty, has Trump leading Harris 55 percent to 45 percent.
However, the FiveThirtyEight poll has Harris with a slight lead of 48.1% and Trump with 46.7%. Meanwhile, the YouGov poll has Harris at 50% to win the popular vote and Trump at 47%.
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