Most Polymarket Traders Lost Money as Top 0.04% Captured Majority of Profits — Analysis

Company Polymarket data analysis shows a stark distribution of trading outcomes across its user base. According to on-chain metrics compiled by Company DeFi Oasis and summarized via Company Dune, among more than 1.7 million trading addresses, roughly 70% of addresses realized losses while only 30% turned a profit. The report highlights extreme concentration at the top: fewer than 0.04% of addresses captured over 70% of total realized profits — approximately $3.7 billion in cumulative gains.

Methodology and distribution. The calculation tracked realized profit and loss as total sale proceeds plus redemption amounts minus purchase costs, explicitly excluding unrealized gains or losses. The analysis revealed that most profitable accounts earned modest returns between $0 and $1,000, representing 24.56% of all addresses but capturing just 0.86% of total profits. Achieving gains above $1,000 generally required ranking in the top 4.9% of participants. At the extreme, 668 addresses with profits exceeding $1 million accounted for 71% of all realized gains, while 2,551 traders fell in the $100,000–$1 million bracket. Conversely, over 1.1 million addresses (63.5%) logged losses between $0 and $1,000, and 149 addresses lost more than $1 million each.

Implications for retail traders. The skewed distribution underscores how professional market makers, sophisticated algorithms, and large accounts extract disproportionate value from retail participants. Traders holding large open positions may show significantly negative realized returns despite potential paper gains, because realized P&L only reflects closed positions. This dynamic mirrors patterns long observed in traditional financial markets where a tiny elite captures most realized profits.

Broader market context. This revelation arrives alongside questions over conflicts of interest as platforms build internal market-making desks. Notable industry moves include market-making and product expansion by firms such as Company Crypto.com and Company Kalshi. Meanwhile, Company Intercontinental Exchange committed $2 billion to the space, pushing Company Polymarket’s post-money valuation to roughly $9 billion after recent funding rounds. Despite concentration concerns, Company Polymarket’s activity continues to grow: monthly active traders approached 462,600 and volumes surged past prior records after the platform completed its U.S. relaunch beta in November following a prior settlement with regulators.

Regulation and debate. The platform’s founder, Mr. Shayne Coplan, has been active in regulatory discussions, participating in a roundtable with the SEC and CFTC. At the same time, legal friction is growing: Company Coinbase filed lawsuits against several U.S. states over authority to regulate prediction markets ahead of its planned collaboration with Company Kalshi. The rapid mainstreaming of prediction markets — including integration of live probabilities into Company Google Finance search results and launches like Company FanDuel's FanDuel Predicts (in partnership with Company CME Group) — intensifies regulatory and ethical scrutiny.

Ethical debate and academic defense. Public discussion has been heated: Mr. Vitalik Buterin defended prediction markets as mechanisms that can improve accountability and truth-seeking compared with unbounded social media narratives, arguing that financial stakes incentivize accuracy. Critics, including Ms. Cassie Heart, have raised moral concerns about betting on catastrophic outcomes. The debate frames not only the future of product design but also regulatory approaches.

Takeaway. The DeFi Oasis findings illustrate that while Company Polymarket and broader prediction markets are growing rapidly (on-chain volumes jumped from under $100 million monthly to over $13 billion within a year on some platforms), the economic benefits are highly concentrated. Whether greater regulatory clarity, institutional participation, or product-level protections can rebalance outcomes for retail traders remains an open question. For now, the data suggests most participants subsidize profits for a very small elite.