Prediction markets harbor substantial financial activity, but the typical trade volume on Polymarket—a leading all-or-nothing marketplace—falls below this threshold.
Pew Research investigated nearly 12,000 Polymarket accounts that executed trades on 10 frequently traded events earlier this year. By examining publicly accessible data from these wallets between May 7 and June 19, the survey revealed that the “average” Polymarket trader is not engaging in substantial trades.
“The typical (median) Polymarket user conducted 46 trades over a span of 10 active trading days during our analysis,” the researchers noted. “Each trade averaged $6.50 in value.”
Polymarket relies on decentralized finance (DeFi) frameworks, indicating that trades are finalized on a publicly accessible blockchain.
Polymarket Traders Achieve Balance, Sidestep Major Losses
With the surge in prediction markets, including a growing number of traders utilizing these platforms for additional income, critics are concerned that retail investors often experience significant losses, serving mostly as liquidity for seasoned traders and strategic bettors.
However, the findings suggest otherwise. During the six-week span analyzed by Pew, it was discovered that most Polymarket traders either broke even or sustained minor losses.
“On average, a trader spent slightly over $600 on the platform, with a net loss of under $2. More than half of the traders (58%) either gained or lost less than $100,” Pew reported.
This contradicts earlier research suggesting that a majority of retail traders on Polymarket incur losses, with only a small percentage achieving consistent profitability.
Pew highlights that among the traders evaluated over the six-week period, 7% recorded profits exceeding $1,000, while “9% faced losses of a similar magnitude.”
Polymarket Traders Maintain Focus
Prediction markets, including Polymarket, provide numerous derivatives on a variety of events spanning economics, politics, pop culture, sports, and more. Despite this variety, many Polymarket users tend not to venture into areas they consider outside their expertise.
Pew noted that during the evaluated timeframe, 75% of traders focused on a singular subject area, while 24% specialized in one niche.
Driven partly by the World Cup, sports traders emerged as the most active group on Polymarket, averaging nearly six trades each day. It’s noteworthy that Pew’s study included the NBA and NHL playoffs along with the World Cup.
Traders who focused on cryptocurrency conducted an average of 59 trades over five active trading days, whereas those involved with political event contracts were more conservative, averaging 13 trades over seven active days, according to Pew.
“Traders concentrating on sports tended to place slightly higher-value trades: $9 on average, compared to $6 for those focused on politics and under $4 for cryptocurrency traders,” concluded the research firm.