Summary: Paradigm researchers find Polymarket's trading volume may be double-counted on analytics dashboards due to redundant blockchain events, potentially impacting its $9B valuation.
Polymarket's Trading Volume: Double Counting Bug Discovered
Polymarket's trading figures are being double-counted, according to Paradigm researchers, impacting the perceived success of the prediction market platform. Major analytics dashboards are reportedly double-counting Polymarket’s trading volume due to redundant blockchain events. This revelation could cast a shadow on Polymarket's recent success, especially considering its reported valuation.
Key Details
The Issue: A researcher at Paradigm discovered a "data bug" leading to inflated trading volume on Polymarket. The Reason: Polymarket's on-chain data contains redundant representations of each trade. When trades occur, the system emits multiple “OrderFilled” events, one for makers and another for takers, which describe the same trade from different perspectives. The Impact: Major dashboards combine these events, counting the same volume twice. Affected Platforms: DefiLlama, Allium, Blockworks, and many Dune dashboards were double-counting volume.
Market Context
Polymarket has been seen as a rare crypto success recently, as spot and derivatives markets have been in turmoil. The Intercontinental Exchange (ICE) valued the prediction platform at $9 billion this week, citing $25 billion in trading volume. However, this valuation and reported volume are now in question due to the double-counting issue. In September, reports indicated Polymarket was preparing for a US launch at a $10 billion valuation, and in October, Bloomberg reported it was looking to raise funds at a valuation between $12 billion and $15 billion. Dune Analytics reported a monthly record of $3.7 billion in trading volume in November, which may be double the actual figure.
Polymarket's complex blockchain data makes it difficult for crypto data analysts because the data has too many layers of interacting complexity to untangle using just a block explorer. Polymarket trades can be simple swaps, or they can be “splits” and “merges” where both parties exchange cash for opposing positions. The smart contracts emit redundant events for tracking purposes, and standard blockchain explorers don’t make this distinction clear.
Angle
Prediction markets are rapidly evolving into a critical financial sector. As the category matures, the industry should converge on consistent, transparent, and objective reporting standards.
What This Means
The discovery of inflated trading volumes could impact Polymarket's perceived success and future valuation. Accurate data reporting is crucial for the credibility and growth of prediction markets.
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