Omer Goldberg, founder of Chaos Labs, on how prediction markets became manipulation markets

Omer Goldberg, founder and CEO of DeFi risk platform Chaos Labs, has been publicly arguing that many high-profile crypto prediction markets are drifting away from their stated goal of information discovery and price discovery and toward being manipulation-prone venues, especially in the context of the 2024 U.S. election. His comments build on Chaos Labs’ recent on-chain analysis of the leading prediction platform Polymarket, conducted together with blockchain analytics firm Inca Digital and reported by Fortune. According to that analysis, a large share of trading in Polymarket’s flagship 2024 U.S. presidential market shows patterns consistent with wash trading—a classic form of market manipulation where the same party rapidly trades with itself to fabricate volume and liquidity. Chaos Labs’ study concluded that roughly one-third of trading volume and users in Polymarket’s presidential market were likely attributable to wash trading. Inca Digital independently characterized a “significant portion” of volume as potential wash trades. Both firms also flagged discrepancies between Polymarket’s reported dollar volumes and the on-chain transaction data, with Inca finding about $1.75 billion in actual transaction volume versus Polymarket’s $2.7 billion figure, and Chaos Labs attributing much of the gap to the platform conflating traded shares with U.S. dollars rather than reporting true notional volume. These findings support Goldberg’s claim that prediction markets can become “manipulation markets” when incentives favor boosting headline volume and odds visibility over market integrity. The episode matters because Polymarket’s odds are increasingly cited by traders, media outlets, and political commentators as if they were objective, crowd-sourced probabilities of electoral outcomes. If the underlying order flow is heavily distorted by wash trading or other forms of manipulation, the resulting prices may mislead observers about real-world expectations and could be exploited to shape narrative, sentiment, or even fundraising and campaign strategy. Goldberg’s broader work at Chaos Labs, which specializes in running stress tests and market-manipulation simulations for DeFi protocols and exchanges, underscores a growing focus on market integrity and oracle reliability across crypto infrastructure. His critique situates prediction markets within a larger debate: whether they genuinely aggregate dispersed information or simply offer another venue where capital and sophisticated actors can manufacture apparent consensus.

✨ AI-generated background, compiled from web sources — not editorial content.

More coverage

• Chaos Labs receives $20 million in seed funding - Fortune (fortune.com)
• Exclusive: Election betting site Polymarket is rife with fake 'wash ... (inca.digital)
• # 64 | PREDICTION MARKETS (II): Spoiling the Election Love Story (dirtroads.substack.com)
• Omer Goldberg (@omeragoldberg) / Posts / X - Twitter (x.com)
• Omer Goldberg - Introducing the Edge Oracle Network by Chaos Labs (token2049.com)

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• Manipulation
• Prediction Markets