How a five-second trick let traders drain millions from Polymarket
After months of public warnings from onchain analysts, the prediction market is moving to time-weighted prices to make artificial price pushes too costly.
Polymarket has implemented a new five-second trick to drain millions from traders after identifying manipulative activity in its short-dated crypto markets. Research from Stanford University and Singapore Management University discovered that 821 accounts made $8.2 million in manipulated settlement windows, prompting Polymarket to update its resolution method.
To safeguard market integrity, the platform will now use a time-weighted average price (TWAP) for five-minute markets, a 30-second average for five-minute markets, and a 60-second average for four-hour markets. The change will be facilitated through Chainlink Data Streams. The study found that 93% of losses in manipulated windows fell on retail traders, with 93% of the losses in windows classified as manipulated.
Polymarket did not respond to requests for further information. The issue of market manipulation is not limited to Polymarket, as other platforms like Kalshi also face similar vulnerabilities, but they use regulated price indices and have stricter verification processes.
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