Polymarket Trading Volume Revealed: The Surprising Double-Counting Mistake Inflating Prediction Markets

Double-Counting Error in Polymarket: An analysis by Paradigm reveals that Polymarket's trading volume is significantly inflated due to a double-counting error by analytics platforms, which mistakenly sum both buyer and seller transactions as separate trades.

Impact on Data Transparency: This inflation of trading volume raises concerns about data transparency in decentralized finance, as accurate volume metrics are crucial for assessing market health and investor confidence in prediction markets.

Affected Analytics Platforms: Major analytics platforms like DeFiLlama, Alium, and Blockworks are identified as using flawed methodologies that do not account for Polymarket's unique transaction structure, highlighting a broader challenge in DeFi analytics.

Call for Improved Methodologies: The incident emphasizes the need for analytics platforms to adopt protocol-specific accounting methods and for investors to verify volume metrics across multiple sources to ensure accurate data interpretation.