The top 0.04% of users on Polymarket account for 70% of the profits, while 70% of users incur losses.

Source: TokenPost Original Title: Polymarket, Top 0.04% Dominate 70% of Profits… 70% of Users Suffer Losses Original Link:

Extreme Profit Disparity on Prediction Market Platform Polymarket

Serious income inequality has emerged on the cryptocurrency prediction market platform Polymarket. According to data from DeFi analysis firm DeFi Oasis, in an analysis of over 1.7 million trading addresses, approximately 1.2 million addresses (70%) recorded realized losses. In contrast, only 30% of addresses were profitable, with the top 0.04% of traders capturing the majority of the $3.7 billion in total profits.

Profits Concentrated Among a Small Number of Top Traders

Analysis shows that 24.56% of profitable addresses earned less than $1,000, accounting for less than 1% of the platform’s total profits. To earn over $1,000, traders need to be among the top 5%.

The data is even more alarming: just 668 addresses (with over $1 million in profits) account for 71% of the platform’s total earnings. Meanwhile, over 1.1 million addresses (63.5%) incurred losses of less than $1,000, and 149 addresses suffered massive losses exceeding $1 million.

Structural Imbalance Sparks Discussion

This “profit concentration phenomenon” is similar to traditional financial markets—professional traders and algorithmic traders earn the majority of profits, while ordinary participants suffer losses. DeFi Oasis warns that traders holding large open positions may see unrealized gains on paper, but their actual realized gains could be less impressive.

Platform Maintains Strong Growth

Despite these disparities, Polymarket’s own performance remains robust. Monthly active users near 460,000 by year-end, with trading volume reaching a record high. After settling for $1.4 million with the U.S. Commodity Futures Trading Commission (CFTC) in 2022, the platform has been operating overseas and re-launched testing services in the U.S. market in November.

The platform’s valuation recently reached $9 billion, and it received a $2 billion investment from Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange. Google Finance has integrated real-time data from Polymarket and Kalshi since November, providing prediction market probabilities in search results.

Industry Perspectives Diverge

Ethereum co-founder Vitalik Buterin recently defended prediction markets, claiming “the information accuracy of prediction markets exceeds that of social media,” and that “platforms involving financial interests are more responsible and can reduce overreactions.”

However, some question the ethical issues surrounding bets on catastrophic events like death or natural disasters. Cassy Hart, founder of Quilibrium, pointed out that “the structure allowing betting on death and disasters fosters public hostility toward cryptocurrencies.” Vitalik countered that “similar short-selling issues exist in traditional stock markets.”

Increasing Competition and Uncertain Regulatory Outlook

Competition in prediction markets is intensifying. FanDuel has partnered with the Chicago Mercantile Exchange to launch the “FanDuel Predicts” platform, and a leading exchange is preparing to enter the prediction market by January 2026, while suing the governments of Michigan, Illinois, and Connecticut. In 2024, total trading volume on major platforms is about $44 billion, with on-chain prediction markets averaging over $10 billion per month.

Prediction markets are essentially a game where a few experts and algorithms earn nearly all the profits, putting ordinary participants at a natural disadvantage. Whether future regulation clarity and institutional participation can alleviate this imbalance remains highly uncertain.