A study by Stanford University and Singapore Management University found that 821 traders extracted $8.2 million from Polymarket's five-minute bitcoin contracts by pushing the spot price on Binance seconds before settlement. Net order flow on Binance jumped about 50% in the final 10 seconds before each close, and 93% of the losses fell on retail participants.
A small group of traders systematically gamed Polymarket's fastest bitcoin betting product, taking $8.2 million from the platform's five-minute contracts by nudging the Binance spot price in the final moments before each bet resolved. That finding comes from a working paper by David Dai and Ruizhe Jia of Stanford University and Shihao Yu of Singapore Management University.
The researchers examined roughly 16,000 five-minute bitcoin up-or-down contracts from their launch on Feb. 12, 2026 through April. These contracts settle against a Chainlink oracle that aggregates spot prices from major exchanges, so whoever can move the spot price at the close decides which side of the bet pays out.
How the trade worked
The mechanics were simple. A trader buys the "up" side of a five-minute contract, then fires aggressive buy orders into the Binance spot market seconds before the betting window shuts. Because the Binance mid-price sits about two and a half basis points from the oracle resolution price, even a small push can flip the outcome. According to the authors, manipulators "take $8.2 million in the pushed cycles while breaking even in the rest."
Clear fingerprints showed up in the order books. After the five-minute contracts launched, net order flow on Binance in the final ten seconds before each close jumped roughly 50% above pre-launch levels, with concentrated, directional bursts arriving as the windows expired.
Retail bore the cost
The behavior was rare but profitable. Only 821 traders out of roughly 243,000 exhibited clear manipulation patterns, about one in 300. Yet the losses were lopsided: 93% fell on retail participants, who effectively served as liquidity providers on the losing side of pushed settlements.
Researchers found the manipulation signature much attenuated in Polymarket's 15-minute contracts, suggesting a longer settlement horizon makes the trade too expensive to push reliably. Their main recommendation is simply to lengthen the contract window.
The findings land at a delicate moment for prediction markets, where traders have stacked more than $100 million on bitcoin price outcomes across Polymarket, Kalshi and Myriad in recent months. Neither Polymarket nor Chainlink has publicly responded, and the authors stopped short of alleging any rule-breaking by the platform.
Source: Bitcoin News
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