According to a CNBC analysis of Polymarket's closed market data, roughly 70% of all closed markets recorded under $10,000 in reported trading volume between 2021 and the end of May 2026. The findings reveal a heavily skewed distribution where fewer than 10% of closed markets drew between $100,000 and $1 million in reported volume. Most significantly, more than 45,000 markets, close to 5% of the total, showed no reported volume at all. The analysis, published on July 2, suggests that Polymarket's headline trading growth has been concentrated in a relatively small number of active markets, while most markets remained thinly traded despite the platform's rapid overall growth in recent years.
As reported by CNBC, Polymarket data from the Gamma API shows bots dominate the thin end of the market, with more than 80% of volume in sub-$10,000 markets coming from automated trading systems. Joshua Della Vedova, a business professor at the University of San Diego, defined bots as wallets making more than 50 trades a day or more than 1,000 in total. Using on-chain data from Polymarket, Della Vedova found that bots made about $1.2 million in shallow markets and approximately $35.1 million in markets with more than $10 million in trading volume from November 2022 to February 2026. These bots earned money across markets of all sizes, unlike retail traders who have faced losses in both shallow and heavily traded markets. As Della Vedova explained, "They are making money across all markets."
Economists warn that low-volume markets carry significant risks for traders. Constantin Bürgi, a professor of economics at University College Dublin, explained that "thin markets by nature imply that small investments can result in large market movements and are typically more volatile." Eric Zitzewitz, a professor of economics at Dartmouth College, said newer traders can face wider spreads between buy and sell prices in shallow markets, making positions more expensive to enter and exit. "New traders can also be left vulnerable in low-volume markets because spreads between buying and selling can blow out, making trades more expensive," Zitzewitz commented. Logan Sudeith, a former financial risk analyst who began trading prediction markets full-time last fall, prefers higher-volume, short-term markets because they are "more capital efficient."
The analysis contrasts Polymarket's comprehensive Gamma API data with Kalshi's on-chain data from Dune, which accounts for only one side of each trade. As reported by CNBC, Kalshi also recorded a large number of low-volume markets based on on-chain data analysis, though the methodology differs from Polymarket's comprehensive volume tracking. Researchers remain divided on whether thin prediction markets produce reliable signals. Evercore ISI strategists found that higher-volume markets produced more reliable probabilities after reviewing five years of completed markets on Polymarket and Kalshi, noting that only 8% of markets across both platforms reached $1 million in volume. However, Theis Ingerslev Jensen from Yale University told CNBC that market quality depends more on who is trading than how much trading takes place, with skilled or informed traders driving much of Polymarket's accuracy. Harry Crane, a statistics professor at Rutgers University, said the prevalence of thin markets probably won't change how prediction markets function for the public or Wall Street, but emphasized that traders must understand the risks involved.
