TechFlow News, July 16, according to Cointelegraph, researchers from Stanford University and Singapore Management University found that the 5-minute Bitcoin prediction market on the Polymarket platform incentivizes traders to manipulate spot prices before contract settlement, enabling professional participants to profit from retail traders.
The study shows that since the contracts use Chainlink price feeds and settle based on the Bitcoin price at the end of the trading window, traders have a profit motive to influence the spot market immediately before settlement. Analysis of trading data after the contracts launched in July 2024 found a surge in Bitcoin spot market order flow and rapid price reversals before settlement, estimating that approximately $1.28 million was transferred from ordinary traders to manipulators during this period. The researchers stated that extending the contract duration from 5 minutes to 15 minutes could largely eliminate this effect and suggested adopting alternative solutions such as time-weighted average price to optimize settlement design.
