Where money is on the line, competition naturally heats up — and that's exactly what happens in prediction markets. This space now sees more informed traders competing against daily retail participants who often bet more quickly and with less research. This mix has transformed the market into a battlefield where intuition meets speculation. Those with more information tend to have the advantage, while casual users risk being overwhelmed and outmatched.
In brief
- 10x Research finds that most users approach prediction markets like sports bettors, chasing quick wins.
- Growing liquidity and increased retail participation are allowing professional desks to ramp up their activity, further widening the gap between casual and informed participants.
- A Paradigm researcher discovered a bug in Polymarket data that artificially doubled trading volumes.
In predictive markets, profits go to informed traders
Although prediction markets are promoted as platforms leveraging collective intelligence, 10x Research finds that outcomes are predominantly influenced by a small group of informed participants. These traders make profits by accurately assessing probabilities, effectively managing risks, and taking advantage of bolder bets placed by retail users.
10x Research noted that “the majority of users behave like sports bettors, trading dopamine and storytelling for discipline and advantage, while a small cohort systematically monetizes mispriced optimism, order flow imbalance, and late-stage convergence. » This dynamic is reinforced by the rise in liquidity and the influx of retail users who encourage professional desks to intensify their activity, exploiting inefficiencies and information gaps in the market.
Blockchain analysis highlights the difficulties of less experienced traders. Dune data shows that around 17% of portfolios on Polymarket are in profit, leaving the vast majority in losses. Although the exact amounts vary, this suggests that most users fail to grow, and often lose, the money they initially invested, showing how difficult the prediction market can be for casual participants.
Predictive Markets Traders Spark Insider Trading Concerns
While most users struggle, a small number of accounts performed flawlessly, raising questions about possible insider knowledge. Among them, a Polymarket trader named pony-pony maintained a perfect win rate, mainly focusing on bets related to OpenAI news.
Another account, AlphaRaccoon, gained attention after have won more than $1 million in a single day by winning 22 of 23 bets related to Google search trends. Jeong Haeju reported that this same trader previously predicted the early release of Gemini 3.0, earning over $150,000 before the results were publicly known.
Major flaw detected in Polymarket trading data
Beyond individual concerns, structural issues with the platform's data have also been highlighted. Paradigm researcher Storm Slivkoff discovered a significant bug in Polymarket data that caused almost all major dashboards to double count trading volume. The error is not related to wash trading and comes from duplicate entries in the platform's on-chain ledgers.
The bug affects the two main metrics of predictive markets: notional volume, which tracks the number of contracts traded, and cash flow volume, which measures the monetary value of transactions. Paradigm has confirmed that platforms such as DefiLlama, Allium and Blockworks have verified the issue and are now revising their Polymarket data to correct this double counting.
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