Kalshi investors allege Polymarket trading volume is inflated? Let's understand the ins and outs.

Written by: 0xjs

Background

Polymarket is a leading global on-chain prediction market platform, with trading volume surging to billions of dollars, especially during the 2024 US election, and is considered a "bellwether" for the crypto prediction market. Kalshi is another prediction market platform that directly competes with Polymarket.

Paradigm is a top venture capital firm focused on crypto investments. Its founder, Matt Huang, has been active on the X platform for a long time and often shares insights into the crypto ecosystem. Paradigm recently invested in Kalshi, which foreshadowed the subsequent controversy.

Origin of the Event (December 8, 2025)

• Bug Discovery: Paradigm data analyst storm discovered a problem with Polymarket's on-chain data during due diligence.

  Specifically, Polymarket's onchain transaction records contain "redundant representations" for each transaction, causing third-party data aggregation tools (such as dashboards like Dune and Artemis) to double-count each transaction when calculating transaction volume. This is not wash trading or manipulation, but a pure technical bug. Storm posted a detailed explanation on X, including data screenshots and code examples, pointing out that this affected reports on "almost all major dashboards." Storm's post quickly garnered 689 likes and over 226,000 views. Matt Huang retweeted: Less than 15 minutes later, Matt Huang retweeted Storm's post, briefly commenting: "Polymarket data bug: volumes are double-counted in most public data. Interesting find in diligence from @notnotstorm." This retweet spread rapidly, with the post receiving over 62k views and sparking heated discussion. Polymarket Responds Polymarket's data lead, Primo Data (@primo_data), quickly responded, clarifying the facts: Polymarket's official website does not double-count transaction volume; they display "nominal taker volume" (buyer's nominal value), consistent with traditional prediction market standards like Kalshi. Third-party dashboards (such as Artemis) also display taker notional volume, without the double-counting issue; they even provided screenshots as proof. This topic was discussed in a crypto data chat back in October, and Matt Huang saw the response at the time but did not mention it publicly. Primo Data emphasized that this is not Polymarket's fault, but rather a parsing issue by the data aggregator.

Community and Media Reactions

• Support for Paradigm: Some users praised Storm's discovery, believing it exposed the vulnerabilities of DeFi data integrity and served as a helpful reminder to the industry.

• Questions and FUD Accusations: More controversy focused on "motives." Many users pointed out that Paradigm is an investor in Kalshi (participating in all three most recent funding rounds), and Huang's repost was seen as "smearing a competitor."For example:

• User @amathuxbt stated: Is it all because Polymarket founder Shayne Coplan didn't give Paradigm an investment opportunity?

@tier1haterr commented: Kalshi also calculated it this way, but because it's a Paradigm investment project, it's exempt from scrutiny? Other replies, such as @andrewhong5297, stated that this is a "known issue," debated over a year ago, similar to the standard bid + ask settlement method in the market. Wider discussion: The incident quickly became a trending topic, with some reports stating that "some observers criticized Huang for attempting to discredit competitors." Meanwhile, an independent study from Columbia University (released in November) also pointed out issues with wash trading in the Polymarket sports marketplace, further amplifying doubts about the platform's data reliability, but Huang's accusations were clearly unrelated to wash trading. Current impact and outlook: Several dashboards (such as Dune) have begun investigations, potentially requiring updates to query logic. Polymarket's actual trading volume may be overestimated by 50%-100%, which could affect investors' assessment of the prediction market's size. Industry Implications: This incident highlights the difference between on-chain data and centralized platforms—Polymarket's transparency is a double-edged sword, easily misinterpreted, but also easy to audit. The rivalry between Paradigm and Kalshi makes this more like an "industry feud," but it has also driven discussions on data standards. Latest Developments (December 9, 2025): Polymarket has not issued any further official response, and Huang has not followed up. The community is clearly divided, but overall, it hasn't escalated into a major crisis—prediction markets remain a hot topic in crypto, and the potential of Kalshi and Polymarket as "civilization-level truth machines" remains unchanged. In short, this was a "small storm" originating from a technological discovery that quickly evolved into a competitive narrative, but at its core, it serves as a reminder of the importance of data transparency.