Did Kalshi investors accuse Polymarket of inflating trading volume? Understanding the full story

Written by: 0xjs

Background

Polymarket is the world’s leading on-chain prediction market platform, with trading volumes surging to billions of dollars during the 2024 US election, making it a “weather vane” for crypto prediction markets. Kalshi is another prediction market platform and a direct competitor to Polymarket.

Paradigm is a top venture capital firm focused on crypto investments. Its founder, Matt Huang, is highly active on X, where he frequently shares insights into the crypto ecosystem. Paradigm recently invested in Kalshi, setting the stage for later controversy.

Origin of the Incident (December 8, 2025)

• Bug Discovered: Paradigm data analyst storm, during due diligence, found an issue with Polymarket’s on-chain data. Specifically, in Polymarket’s onchain transaction records, each transaction had a “redundant representation,” causing third-party data aggregation tools (such as Dune, Artemis, and other dashboards) to double-count each transaction in their volume calculations. This was not wash trading or manual manipulation, but a purely technical bug. storm posted a detailed explanation on X, with data screenshots and code samples, pointing out that this affected “almost all major dashboards.” storm’s post quickly garnered 689 likes and 226,000+ views.
• Matt Huang Retweets: Less than 15 minutes later, Matt Huang retweeted storm’s post with a brief comment: “Polymarket data bug: volumes are double-counted in most public data. Interesting find in diligence from @notnotstorm.” The retweet went viral, the post reached over 62k views, and sparked heated discussion.

Polymarket Response

• Polymarket’s Head of Data, Primo Data (@primo_data), responded quickly to clarify:

1. Polymarket’s official website itself does not double-count trading volume; they display “notional taker volume” (buyer notional value), which is consistent with standards used by traditional prediction markets like Kalshi.
2. Third-party dashboards (such as Artemis) also display taker notional volume, with no double-counting issue; they even attached screenshots as proof.
3. This topic was already discussed in crypto data group chats 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 an issue with data aggregators’ parsing.

Community and Media Reaction

• Support for Paradigm: Some users praised storm’s discovery, believing it exposed hidden risks in DeFi data integrity and served as a useful reminder for the industry.
• Doubts and FUD Accusations: More of the controversy focused on “motivation.” Many users pointed out that Paradigm is an investor in Kalshi (having participated in the last three funding rounds), and Huang’s retweet was seen as “smearing a competitor.” For example:

• User @amathuxbt said: Is this all because Polymarket founder Shayne Coplan didn’t give Paradigm a chance to invest?
• @tier1haterr said: Kalshi calculates the same way, but since it’s a Paradigm portfolio company, it escapes scrutiny?
• Other replies, such as @andrewhong5297, called this a “known issue” that was debated over a year ago, similar to the standard settlement method of bid + ask in markets.

• Broader Discussion: The incident quickly trended, with some reports stating “some observers criticized Huang for trying to discredit a competitor.” Meanwhile, an independent study from Columbia University (published in November) also pointed out that Polymarket’s sports markets had wash trading issues, further amplifying doubts about the platform’s data reliability, but Huang’s criticism explicitly had nothing to do with wash trading.

Current Impact and Outlook

• Data Correction: Multiple dashboards (such as Dune) have begun investigations and may need to update their query logic. Polymarket’s actual trading volume may have been overestimated by 50%-100%, which could affect investors’ assessment of prediction market scale.
• Industry Lessons: The incident highlights the differences between on-chain data and centralized platforms—Polymarket’s transparency is a double-edged sword, as it’s easily misinterpreted but also easy to audit. The Paradigm-Kalshi competitive relationship makes this look more like “industry infighting,” but it also pushes forward the discussion on data standards.
• Latest Developments (2025-12-09): Polymarket has not issued a further official response, nor has Huang followed up. The community remains divided, but overall the situation has not escalated into a major crisis—prediction markets remain a crypto hotspot, and the “civilization-scale truth machine” potential of Kalshi and Polymarket is unchanged.

In summary, this was a “small storm” triggered by a technical discovery that quickly evolved into a competitive narrative, but at its core serves as a reminder about data transparency.