Key facts
- Polymarket saw over $600 million in trading volume on two global election markets.
- Ethiopian election market volume exceeded $285 million, with significant trading on losing candidates.
- Experts suspect wash trading or activity farming to inflate volumes for potential token rewards.
- Polymarket stated it flagged and blocked suspicious accounts after investigation.
- Analysis of the Ethiopian market showed most trades resulted in no profit or loss and were held for seconds.
Polymarket, a prediction market platform, is under scrutiny for unusual trading activity on its election markets, particularly concerning the Ethiopian and Romanian elections. The Ethiopian market saw over $285 million traded, with a significant portion on losing candidates and seemingly pointless back-and-forth transactions between accounts, raising concerns of wash trading or activity farming. Experts like Rajiv Sethi, a Barnard College economics professor, described the phenomenon as a "zombie market." Polymarket stated it flagged and blocked suspicious accounts after an investigation, though the timing and extent of the activity before action was taken remain unclear. Similar anomalies were observed in a Romanian election market, where nearly all volume was flagged as suspicious wash trading. MSR Decode analysis suggested the trading might be an attempt to inflate volumes for potential future token allocations, a behavior seen in the crypto industry. The Ethiopian market analysis revealed that most trades resulted in no financial gain or loss and were held for very short durations.