Polymarket taps Chainalysis for on-chain market oversight

Polymarket has chosen Chainalysis to deploy an on-chain market integrity system on its prediction market platform, focused on monitoring trading activity for signs of insider trading and market manipulation.

The agreement covers analytics, investigations, security and professional services, including a bespoke anomaly detection model built on Chainalysis Data Solutions. The system is intended to help enforce Polymarket's Market Integrity Rules across a decentralised finance platform where trades, positions and settlements are recorded on a public blockchain.

The move comes as prediction markets draw wider attention and scrutiny, with operators facing questions about how they monitor conduct in markets tied to political outcomes, current affairs and other real-world events. Because Polymarket runs entirely on-chain, the companies argue that trading behaviour can be examined through public blockchain records rather than private exchange data alone.

Under the agreement, Chainalysis will provide investigative tools that can generate blockchain-verified evidence for proactive and reactive engagement with law enforcement and regulatory inquiries. The package also includes security tools aimed at threat prevention, along with support services to help deploy the system, train staff, develop new detection methods and assist with complex investigations.

A central part of the arrangement is a model designed to identify patterns that may indicate the use of insider knowledge in prediction markets. The work expands Polymarket's existing monitoring system, which is already used to detect possible breaches of its terms of use.

On-chain oversight

Prediction markets let users buy and sell positions based on the likelihood of future events. Supporters say market pricing can provide a real-time signal of collective expectations, while critics have raised concerns about manipulation, the handling of sensitive information and the need for effective oversight when markets move quickly around major news events.

Blockchain-based markets create a different evidential trail from conventional venues because transactions are visible on public ledgers. That does not remove concerns about misconduct, but it does create a large dataset that can be analysed for unusual timing, wallet relationships and trading patterns linked to specific outcomes.

For Polymarket, the partnership reflects a push to formalise that process as scrutiny of prediction markets grows. The new system is intended not only to detect suspicious conduct but also, when necessary, to support reporting to authorities with on-chain evidence.

"Polymarket was built on-chain because transparency matters, and our platform shows what markets can look like when trades are open, traceable, and accountable by design," said Shayne Coplan, founder and CEO of Polymarket.

"Every market deserves that standard. This partnership with Chainalysis pairs that transparency with the monitoring and enforcement infrastructure to back it up, and helps us continue to build the most trusted source of truth in markets," Coplan said.

Broader use

Chainalysis is best known for software used by crypto businesses, financial institutions and public agencies to track digital asset flows and investigate illicit activity. Its work with Polymarket extends that focus into prediction markets, a sector that blends trading, public forecasting and decentralised finance.

The companies said the detection system is designed to evolve as new trading patterns emerge, suggesting ongoing model development rather than a fixed, rules-based approach. Professional services are included to refine methods over time and respond to more complex cases.

One challenge for market operators is distinguishing legitimate informed trading from activity that may rely on non-public information or coordinated manipulation. In prediction markets, where prices can move sharply on rumours, leaks or breaking developments, identifying that difference can be difficult. An on-chain approach may give investigators more information about transaction histories and wallet interactions, although any enforcement action would still depend on how that evidence is assessed by the platform and, where relevant, authorities.

Chainalysis said the transparency of blockchain-based trading creates an opportunity to set a higher standard for oversight than in some traditional markets, where relevant order and settlement data may be fragmented across venues and intermediaries.

"On Polymarket all trades and all settlements are recorded on a blockchain - a level of transparency that traditional markets simply cannot match," said Jonathan Levin, co-founder and CEO of Chainalysis.

"Pairing that transparency with Chainalysis' data and expertise sets a new standard for market integrity enforcement. With this collaboration, on-chain markets have the potential to be the most trustworthy markets for understanding world events," Levin said.