How a five-second trick let traders drain millions from Polymarket

FinanceHow a five-second trick let traders drain millions from PolymarketAfter months of public warnings from onchain analysts, the prediction market is moving to time-weighted prices to make artificial price pushes too costly.By Olivier Acuna|Edited by Jamie Crawley Aug 7, 2026, 3:09 p.m. 3 min readMake preferred on ShareShare this articleCopy linkX iconX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShowPolymarket is replacing single-price snapshots with time-weighted average prices for its short-dated crypto markets after research and trader complaints highlighted widespread settlement manipulation.A study of five-minute bitcoin contracts found patterns of large last-second Binance trades that appeared to move prices before settlement, with most resulting losses in likely manipulated windows borne by retail traders.The new system, which uses Chainlink Data Streams and short TWAP windows, mirrors safeguards used by rival platform Kalshi, which relies on regulated price indexes and moving averages to make brief price distortions harder and costlier.Polymarket has replaced the single-price snapshot used to resolve short-dated crypto contracts with a time-weighted average price, or TWAP after months of trader complaints and research identifying hundreds of accounts whose activity was consistent with settlement manipulation.The researchers had found that 821 accounts made $8.2 million in settlement windows they classified as likely manipulated, prompting criticism that Polymarket’s rules let a small number of traders profit at others’ expense.“To protect market integrity in our crypto up/down markets, we're updating how these markets resolve,” Polymarket said in the X post detailing the changes. “To support liquidity through this transition, we're adding $1M in liquidity rewards across all impacted markets through the month of August.”Five-minute markets will use a 30-second average, while 15-minute and four-hour markets will use a 60-second average, the p…

How a five-second trick let traders drain millions from Polymarket

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