New blockchain analysis reveals a stark profitability crisis on the decentralized prediction market Polymarket. Data from analyst DeFi Oasis, examining over 1.7 million trading addresses, shows that approximately 70% of users have realized net losses, while only 30% are profitable.
The findings expose an extreme concentration of wealth. Fewer than 0.04% of all addresses captured over 70% of the total realized profits, amounting to a collective $3.7 billion. In contrast, the majority of profitable users saw modest returns. About 63.5% of profitable addresses earned between $0 and $1,000, but this large group accounted for just 0.86% of all profits. Simply earning over $1,000 placed a user in the top 4.9% of all participants.
The analysis calculated realized profit and loss by tracking total sale proceeds plus redemption amounts minus purchase costs, excluding unrealized gains. At the extremes, 668 addresses with profits exceeding $1 million accounted for 71% of all gains, while just over 140 addresses suffered losses greater than $1 million each.
This revelation comes as Polymarket and the broader prediction market sector face increased scrutiny and competition. The platform, which completed beta testing for its U.S. relaunch in November 2025 after a 2022 CFTC settlement, has seen its post-money valuation climb to $9 billion. This follows significant investments, including a $2 billion commitment from Intercontinental Exchange (owner of the NYSE).
The data also arrives amidst a heated ethical debate about prediction markets. Ethereum co-founder Vitalik Buterin recently defended them as superior truth-seeking mechanisms compared to social media, arguing that financial stakes enforce accuracy. This sparked a debate with Quilibrium founder Cassie Heart, who questioned the ethics of profiting from catastrophic events.
Competition in the sector is intensifying. Google Finance integrated live data from Polymarket and rival Kalshi in November 2025. FanDuel launched its prediction platform in December through a partnership with CME Group. Meanwhile, Coinbase filed lawsuits against several U.S. states in December 2025, challenging state authority over prediction markets ahead of its planned 2026 launch with Kalshi.
Despite the lopsided profit distribution and regulatory uncertainty, the sector is experiencing rapid growth. Combined trading volume across major platforms reached $44 billion in 2024, with on-chain prediction markets surging from under $100 million monthly in early 2024 to over $13 billion.
