A new academic working paper says a small group of Polymarket users drives much of the platform’s price discovery. Summary A new study says 3.14% of Polymarket accounts drive much of the platform’s accuracy. Skilled traders and market makers captured over 30% of gains despite forming a small minority. Researchers said suspected insider accounts moved prices faster but were tied to isolated market events. The study reviewed every Polymarket transaction from 2023 to 2025. The paper came from researchers at London Business School and Yale. It covered 1.72 million accounts, 210,322 markets, and about $13.76 billion in trading volume. The researchers found that only 3.14% of accounts qualified as “skilled winners.” These traders had order flows that predicted short-term price moves and final market outcomes. The paper said skilled traders and market makers captured more than 30% of all gains. Together, they made up less than 3.5% of all accounts on the prediction market platform. Most losing accounts fund the gains The study said raw profits did not always prove skill. Researchers tested trader records by randomly changing buy and sell directions 10,000 times across past trades. The test found that only 12% of top earners overlapped with the skilled group. About 60% of “lucky winners” later moved into losses when tested on another sample of events. The paper also said 67% of accounts marked as unlucky or unskilled losers absorbed the platform’s total losses. That claim challenges the wider view that prediction markets mainly reflect broad crowd wisdom. Insider activity remains under review The researchers also reviewed suspected insider trading activity. They flagged 1,950 accounts that opened shortly before one event and then went inactive after that event ended. Those accounts moved prices 7 to 12 times more per dollar than skilled traders. However, the paper said this activity was too focused on separate events to explain overall market accuracy. The paper comes as prediction markets face more attention from regulators and lawmakers. Polymarket is also reportedly in talks to raise $400 million at a $15 billion valuation. The authors said Polymarket’s accuracy reflects “the wisdom of an informed minority, not the wisdom of the crowd.” Polymarket CEO Shayne Coplan previously described the platform as “the most accurate thing we have as mankind right now.”
