According to Paradigm researchers, the reported trading activity and volume on the prediction market platform Polymarket may be significantly higher than the actual situation due to "data discrepancies."
The venture capital firm's researcher, Storm, stated, "It turns out that almost all major dashboards are redundantly counting Polymarket's trading volume unrelated to wash trading."
Storm explained that this is because "Polymarket's on-chain data has redundant representations for each transaction."
When a trade occurs on Polymarket, the system emits multiple "OrderFilled" events: one set for the market maker with existing orders and another set for the taker executing the trade.
These events describe the same transaction from different perspectives rather than being independent trades. However, many mainstream dashboards combine them, leading to the same volume being counted twice.
Recently, amid turmoil in the spot and derivatives markets, Polymarket has been seen as a rare success story in the crypto industry. The discovery that its leading metrics may be inaccurate on many dashboards could undermine some of its perceived success.
The researcher further explained that this accounting error "exaggerates two commonly used trading volume metrics in prediction markets: nominal trading volume and cash flow."
This complexity arises because trades on Polymarket can be simple exchanges or involve "splitting" and "merging," where both parties exchange cash for opposing positions.
Smart contracts emit redundant events for tracking purposes, and standard blockchain explorers do not make a clear distinction, the researcher pointed out.
Cointelegraph reached out to Polymarket for comment but did not receive an immediate response.
Reportedly, the Intercontinental Exchange (ICE) valued the prediction platform at $9 billion this week, citing its $25 billion trading volume, but this figure may now be in question.
It was reported that in September, Polymarket was preparing to launch in the U.S. with a valuation of $10 billion. In October, Bloomberg reported that it was seeking funding at a valuation of $12 billion to $15 billion.
Meanwhile, according to Dune Analytics, the platform achieved a monthly trading volume record of $3.7 billion in November, but if Paradigm's research is accurate, this figure could be double the actual value.
The researcher stated, "DefiLlama, Allium, Blockworks, and many Dune dashboards are redundantly counting."
The researcher concluded that the prediction market is rapidly evolving into a key financial sector, "As this category matures, the industry should converge on consistent, transparent, and objective reporting standards."
Related: The head of the Office of the Comptroller of the Currency (OCC) stated that there is "no reason" to treat banks and the crypto industry by different standards.
Original article: “Paradigm: Polymarket Trading Data Double Counted”
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