The prediction market Polymarket has gained popularity amid developments and speculations related to the United States presidential election. However, recent research suggests there could have been an attempt to manipulate the outcome of a derivative bet.
On Friday, September 6, Dumpster DAO posted a thread on X looking into what the account called a manipulation attempt. The activity involved the dispute between Donald Trump and Kamala Harris a few days after Trump regained popularity, as Finbold reported.
In summary, the investigator believes a group – or a single individual – tried to briefly manipulate the “Presidential Election Winner” bet to win the derivative market, speculating which candidate would be leading it on Friday’s closing.
Interestingly, the manipulation attempt failed, with the involved entities losing over $60,000 in the derivative bet. Here is how it happened:
Diving deeper into the prediction market manipulation attempt
The affected derivative bet was on whether Donald Trump or Kamala Harris would be the “Favorite to win on Polymarket on Friday,” based on the main bet “Presidential Election Winner 2024.”
As Dumpster DAO reported, manipulators deployed over $9 million USDC to buy “yes” shares for Kamala Harris and “no” shares for Donald Trump, trying to make Harris surpass Trump and profit from the better odds against the favorite.
Donald Trump bet on the presidential election winner. Source: Polymarket / Dumpster DAO
At the same time, these users bought the related derivatives shares and bet on Kamala Harris. The activity momentarily changed its price from $0.02 to over $0.20, directly impacting the odds.
Kamala Harris bet on the favorite candidate on Friday. Source: Polymarket / Dumpster DAO
It would have been a very profitable move if it succeeded. However, the prediction market saw an opportunity to profit on seemingly good odds for Donald Trump, quickly rebalancing the bet.
Donald Trump beats Kamala Harris, according to Polymarket’s bets
The United States 2024 presidential election has been fiercely disputed since Kamala Harris surged to become Donald Trump‘s adversary. People have turned to prediction markets to gather insights into each candidate’s popularity, while traders speculate on the outcome.
In particular, the Cryptocurrency-based Polymarket has gained popularity by offering bets in the regulated dollar stablecoin USDC. With the highest speculative volume, experts have deemed this prediction market more accurate than surveys and polls.
On September 7, Finbold gathered data from Polymarket‘s dedicated analysis page for the U.S. elections, currently favoring Donald Trump. As observed, Trump has a shy advantage against Harris, with a 50% chance of victory versus her 48% odds.
Presidential forecast: Donald Trump versus Kamala Harris. Source: Polymarket / Finbold
Essentially, Polymarket‘s data results from a free trading market used by traders worldwide who place their bets by buying shares. Each winning share will pay one dollar in USDC, and traders can purchase them at a floating exchange rate.
As of this writing, Donald Trump’s “yes” bet costs nearly $0.50, translating to the prediction market’s winning chance. If Trump wins the election, everyone who bets on “yes” now will profit $0.50 per share.
Although prediction markets are rapidly growing in importance, the odds can get increasingly volatile and do not guarantee any outcome. Moreover, this recent event suggests this market is also prone to manipulation, requiring caution from its participants.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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