Prediction Markets Grew 4X to $63.5B in 2025, But Risk Structural Strain: CertiK

The surge in prediction markets is masking deeper structural strains, with inflated volumes, fragile safety structure, and state-level regulation more and more testing whether or not costs, liquidity, and entry can maintain up because the sector scales.

That’s in response to a brand new report from blockchain safety agency CertiK, which stated that buying and selling volumes quadrupled in 2025 as exercise concentrated round a small group of dominant platforms, whilst safety and regulatory dangers intensified.

Annual buying and selling quantity climbed from $15.8 billion in 2024 to about $63.5 billion in 2025, with liquidity consolidating round three platforms: Kalshi, Polymarket, and Opinion.

That progress, nonetheless, has been closely pushed by incentives and event-driven spikes relatively than regular natural demand, elevating questions on sustainability as soon as subsidies fade.

CertiK cites educational analysis displaying wash buying and selling on Polymarket rose sharply in 2024, peaking close to 60% of reported quantity as merchants farmed incentives via round trades.

Whereas this inflated liquidity metrics, CertiK claimed costs have largely remained dependable, with manipulation affecting market look greater than forecasting accuracy.



Inflated exercise?

To CertiK, the excellence between inflated exercise and damaged markets comes down as to if synthetic buying and selling begins to have an effect on how costs are shaped relatively than how quantity is reported.

“The important thing indicators can be persistent worth divergence between platforms on the identical occasion that arbitrage doesn’t shut, likelihood actions with out corresponding information or knowledge releases pushed by concentrated pockets clusters, and systematic bias in how markets worth outcomes relative to precise resolutions,” CertiK instructed Decrypt in an interview.

If prediction markets stay “constantly off by 5-10 factors in a single path” and such a sample “correlates with identifiable whale or wash buying and selling exercise” that could possibly be proof that “pretend quantity is bleeding into worth formation,” CertiK stated.

CertiK maintains it has not seen proof of wash buying and selling distorting costs at scale on main platforms, with market chances remaining broadly dependable even in periods of elevated synthetic exercise.

It cautioned, nonetheless, that the information stay restricted and that lower-liquidity markets might change into extra susceptible as incentive packages draw in additional subtle merchants.

Safety challenges

Past market integrity, CertiK warned that the prediction market sector’s speedy progress has outpaced the maturity of its safety structure, leaving structural weaknesses that change into extra consequential as platforms scale and entice extra customers.

Hybrid Web2/Web3 designs exist to stability ease of onboarding with on-chain transparency, however combining them “creates publicity to each assault surfaces concurrently,” CertiK stated.

In December 2025, attackers exploited a flaw within the authentication circulation of Magic Labs, a third-party login service utilized by Polymarket for email-based entry. The vulnerability allowed attackers to bypass two-factor authentication and take management of person accounts created via Magic’s electronic mail login.

The Polymarket incident reveals {that a} failure in authentication can put person funds in danger even when sensible contracts are safe, CertiK stated.

“Addressing this requires treating the total stack as a single safety floor, auditing and testing authentication, key administration, and settlement collectively relatively than in isolation,” the safety agency stated.

Wanting forward, CertiK stated the prediction market sector is coming into 2026 at a crossroads, with functioning infrastructure and clearer U.S. federal coverage offset by unresolved questions round sustainability and oversight, as prediction market platforms proceed to tussle with regulators.

The safety agency expects the present dominance of Kalshi, Polymarket, and Opinion to persist, however says progress will hinge on whether or not platforms can retain customers with out incentives, navigate state-level restrictions, and adapt as jurisdictions weigh their very own regulatory frameworks.

Nonetheless, CertiK cautioned that inflated exercise solely turns into a systemic danger as soon as it begins to have an effect on how costs are shaped.

Decrypt has reached out to Polymarket for remark and can replace this text ought to they reply.