Recent trading activity and volume on the prediction market platform Polymarket may be overstated due to a “data bug,” as suggested by a researcher from Paradigm.
“Almost every major dashboard appears to be double-counting Polymarket volume that isn’t related to wash trading,” stated Storm, a researcher at the venture capital firm.
Storm elaborated that this issue arises from “Polymarket’s onchain data having redundant representations of each trade.”
“Polymarket’s onchain data is intricate, leading to the widespread use of flawed accounting practices.”
When trades occur on Polymarket, the system generates multiple “OrderFilled” events: one set for makers with existing orders, and another for takers executing the trade.
These events reflect the same trade from different viewpoints instead of indicating separate trades. Nevertheless, many primary dashboards have been aggregating them, effectively counting the same volume twice.
Despite being viewed as a notable success in the crypto realm amidst market upheavals, this revelation about potential misreported metrics could undermine its perceived achievements.
Polymarket’s intricate blockchain data
The researcher further clarified that the accounting error “inflates both types of volume metrics typically used in prediction markets: notional volume and cashflow volume.”
“Polymarket’s data has proven notoriously confusing for crypto analysts … the intricacies make it difficult to untangle using a standard block explorer.”
Related: Polymarket plans to implement an in-house market maker to engage in trading against users: Report
This complexity stems from Polymarket trades being simple swaps, or involving “splits” and “merges” where participants exchange cash for opposing positions.
The smart contracts generate redundant events for tracking, and typical blockchain explorers fail to make this distinction clear, according to the researcher.
Cointelegraph reached out to Polymarket for comments, but did not receive an immediate reply.
Polymarket is valued at $9 billion
The Intercontinental Exchange (ICE) recently valued the prediction platform at $9 billion, according to reports, referencing $25 billion in trading volume, now potentially under scrutiny.
In September, Polymarket was reported to be gearing up for a US launch at a $10 billion valuation. In October, Bloomberg noted that it aimed to raise funds at a valuation between $12 billion and $15 billion.
Meanwhile, Dune Analytics revealed that the platform recorded a monthly peak of $3.7 billion in trading volume in November, though this figure could be overstated if Paradigm’s findings hold true.
“DefiLlama, Allium, Blockworks, and many Dune dashboards have been double-counting,” the researcher noted.
As prediction markets rapidly evolve into an essential financial sector, the researcher concluded, “the industry should strive for consistent, transparent, and objective reporting standards.”
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