Polymarket Volume Inflated by 'Artificial' Activity, Study Finds (bloomberg.com) 11
An anonymous reader shares a report: The volume of activity on Polymarket, one of the most popular prediction markets, has been significantly inflated by so-called wash trading in which users rapidly buy and sell the same contracts, according to a new study by Columbia University researchers. The "artificial trading," as the authors call it, varied over time but accounted for an average of 25% of all buying and selling on Polymarket over the past three years, the researchers concluded.
The paper, which has not undergone peer review, was posted Thursday on the open-access research platform SSRN. The authors do not suggest that Polymarket itself was responsible for the wash trading, but they point to elements of the exchange's crypto-based structure that make it possible.
The paper, which has not undergone peer review, was posted Thursday on the open-access research platform SSRN. The authors do not suggest that Polymarket itself was responsible for the wash trading, but they point to elements of the exchange's crypto-based structure that make it possible.
WHAAAAAH--? (Score:3)
Re: WHAAAAAH--? (Score:3)
Let me get this right.
App that circumvents gambling regulations,
Using crypto,
Gets manipulated by amateurs doing HFT?
Yeah, cry me a fucking river.
Hedging Bets? (Score:2)
Pikachu surprised face? (Score:5, Informative)
An off-regulation "market" seeing rampant manipulation? I am shocked! Shocked, I tell you!
They are playing the "we're not a financial market" and "we're not online gambling" at the same time to get out of all regulation, like all good scammers. And like all good scammers, they have buddies scamming the marks/"clients" so their hands stay clean.
Any person dumb enough to put a dollar in there should just go to Vegas instead, at least those guys have to tell you the rules and the odds and then pay out when you win.
Re: (Score:3)
And will people demand the government step in? Will economists ask that the government not step in so they can continue gathering valuable experimental data?
Ok, but WHY? (Score:3)
Is the idea here that high frequency trading and self-dealing can be used to pump-and-dump a given proposition?
So, I find some low-traffic topic suggesting that Pigs Will Fly by the end of 2025 which has "yes" shares trading at $0.01. I buy a bunch of "yes" shares and then buy/sell a small chunk of them back and forth with myself, driving the price up to $0.50. Now I sit back and sell off my "yes" shares for something between $0.50 and $0.40 to anyone who shows up looking to get in on the rapidly-rising "Pigs Will Fly" proposition until a whole bunch of people have bought up the $0.01 shares for 40 times their actual value.
Or is there some other scam at play here?
Re:Ok, but WHY? (Score:5, Informative)
From the abstract: "Wash trading refers to the practice of buying and selling securities without taking a net position, for the purpose of artificially inflating recorded volume. It is prohibited by law in the United States, but evidence suggests that it is widespread on some exchanges, especially those involving cryptocurrencies where trader identities can be shielded."
Crypto too - wash trading for more volume (Score:2)
https://www.npr.org/transcript... [npr.org]
The fake market in crypto
September 19, 20227:10 PM ET
SYLVIE DOUGLIS, BYLINE: NPR.
And I'm Paddy Hirsch. We were reading Forbes magazine recently, and a headline jumped out at us. It said more than half of all bitcoin trades are fake - half - 50%.
WONG: This is not a small thing. As many as 46 million Americans own bitcoin, which is the biggest and most popular crypto asset in the market today. The exchanges that deal in bitcoin claim that they trade $262 billion worth
Re: (Score:2)