Paradigm Reveals Polymarket Data Bubble: Most Analysis Panels Have Significantly Overestimated Trading Volume Due to Duplicate Calculations
On December 9, the prominent investment firm Paradigm reported that most data statistics panels and third-party analysis results for the prediction market platform Polymarket have significantly overestimated trading volume due to the use of incorrect statistical methods.
The core flaw in this data statistic method lies in its direct aggregation of 'OrderFilled' events in Polymarket contracts, which also results in each successful trade being counted twice.
Paradigm pointed out that this duplicate counting has two negative effects. First, it inflates the number of completed contract trades, and second, it amplifies the real dollar cash flow. Therefore, the trading volume data presented in most reports may be far higher than the actual levels.
The firm further emphasized that for prediction markets like Polymarket, which use an order book model, only using unilateral trading volume (for example, counting only the trades from the taker or market maker) as a metric can accurately reflect true market activity.
In summary, this analysis successfully clarifies the long-standing common misconceptions about relevant data in the market, and for those investors, researchers, and media who rely on such data to evaluate Polymarket's scale, liquidity, and market influence, this conclusion holds significant corrective importance.
At the same time, this serves as a wake-up call for the entire prediction market. When evaluating complex on-chain derivative protocols, a more cautious approach must be taken to interpret and handle on-chain data, and judgments should not be made solely based on simple data accumulation to avoid cognitive biases and decision-making errors.
