Polymarket Faces Allegations of Trading Volume Inflation Due to Double-Counting
Paradigm research, led by Storm Slivkoff, has accused Polymarket of inflating its trading volumes on third-party dashboards by double-counting maker and taker OrderFilled events in its smart contracts. This double-counting may have overstated trading activity by approximately 100% on dashboards that aggregate both sides of trades.
The problem specifically impacts Polymarket's CTF Exchange and NegRisk exchange contracts, which emit eight trade types including swaps and split-merge USDC YES/NO trades. Paradigm estimates actual trading volumes for October and November 2024 were about $1.25 billion each month, which is roughly half of the $2.5 billion shown on dashboards prior to corrections.
Proper volume measurement requires using one-sided metrics, either taker-side or maker-side volume, rather than summing both halves, according to the research. In response, DefiLlama, Allium Labs, and Blockworks are updating their dashboards to correct the double-counting issue. Additionally, Dragonfly’s analyst Hildobby noted that dashboards have accounted for this distinction since 2024, though the methodology had not been previously documented.
Polymarket’s Primo Data disputes this characterization, clarifying that their site displays notional taker volume, and that dashboards for both Polymarket and its competitor Kalshi show notional volume. The debate is complicated by Paradigm’s investment in Kalshi, leading some analysts to question bias, while Melee Markets’ Nick Preszler recommends considering alternative metrics such as open interest and fee revenue for more accurate comparisons.
Looking ahead, Polymarket is preparing a full US relaunch following CFTC clearance. The platform is also considering establishing an internal market-making desk to trade against customers, with a valuation target set between $12 billion and $15 billion.
